The rumors about Apple Inc. (NASDAQ:AAPL) signing a deal with China Mobile continue to swirl, and analysts are making projections about what kind of benefits Apple could see from that deal. Stifel analysts estimate an incremental $4 to $8 in earnings per share estimate for Apple over the 12 months after a launch on the world’s largest mobile carrier.
Apple – China Mobile deal still expected on Dec. 18
At this point the media is pretty much sticking with the expectation that Apple Inc. (NASDAQ:AAPL) and China Mobile Ltd. (NYSE:CHL) (HKG:941) will reveal their plans to offer the iPhone on the latter’s network on Dec. 18. Many have paired the launch of the iPhone on China Mobile’s network with the handing out of 4G licenses by the Chinese government. This week the Ministry of Industry and Information Technology did just that, granting the licenses to China Mobile, China Unicom and China Telecom.
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Also this week, a subsidiary of China Mobile Ltd. (NYSE:CHL) (HKG:941) posted a site accepting preorders for Apple’s iPhone 5S and 5C on the China Mobile network. That page was quickly taken down, however, after China Mobile denied having signed a deal with Apple.
How Apple could benefit from China Mobile
Stifel analyst Aaron C. Rakers and his team are projecting a gross margin in the low 40% range for Apple devices sold on China Mobile’s network. That equates to an incremental earnings per share estimate of between $4 and $8 over the 12 months after the launch. To gauge how important China Mobile could be for Apple Inc. (NASDAQ:AAPL), they considered the carrier’s 3G success.
China Mobile had more than 759 million total subscribers at the end of October, 176 million of which were 3G subscribers. That’s 23% of the carrier’s total installed base and 45% of China’s entire 3G mobile subscribership. The analysts note that China Mobile continues to capture most of China’s 3G net adds, taking in about 49% of them in October. They believe this trend could continue as China Mobile rolls out 4G LTE technology. If so, then Apple Inc. (NASDAQ:AAPL) would see tremendous benefits from a deal with the carrier.