China Mobile Seeks iPhone Target - Analyst Blog
November 21 2012 - 8:18AM
Zacks
China Mobile Limited (CHL), the largest
wireless carrier in the world by subscriber base, intends to sell
100 million mobile phones in 2013 with almost 80% of it in
smartphones. This indicates a remarkable improvement of 25% over
2012 expected sales of 70-80 million units. A potential deal with
the world’s second largest smartphone manufacturer Apple
Inc. (AAPL) can be attributable for the raised
guidance.
China Mobile covers more than half of the Chinese mobile market
with a subscriber base of 698.51 million at the end of third
quarter 2012. Nevertheless, the company’s 3G customers comprise
only 11% (75.6 million) of its huge subscriber base.
Two of its closest rivals – China Unicom
Limited (CHU) and
ChinaTelecom Corp. (CHA) – with
subscriber base of 229.49 million and 152.62 million, respectively,
lags far behind but have far better 3G customer concentration than
China Mobile. This provides China Mobile a significant opportunity
to tap this under penetrated 3G market.
China Mobile’s biggest flaw is that it offers mobile service
based on Time Division-Synchronous Code Division Multiple Access
(TD-SCDMA) technology, which is not very well supported by the
handset makers includingApple Inc.’s iPhone,
resulting in lower upload/download speed. However, the competitors
like China Unicom and China Telecom offer their services through
globally acknowledged Wide Band Code Division Multiple Access
(WCDMA) technology.
With nearly a billion cell phone users, China Mobile offers a
huge smartphone market, which is still being dominated by
Google Inc.’s (GOOG) Android operating system (OS)
and Apple’s iOS comes at a distant second place.
The company has been in talks with Apple for quite some time in
order to develop a TD-SCDMA iPhone, although nothing has been
finalized yet. We believe China Mobile has to strike a deal with
Apple sooner rather than later to have any realistic chance of
achieving its 2013 smartphone sales target.
China Mobile currently has a Zacks #2 Rank, implying a
short-term Buy rating.
APPLE INC (AAPL): Free Stock Analysis Report
CHINA TELCM-ADR (CHA): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis Report
CHINA UNICOM (CHU): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
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