Telecom & Wireless
World's Largest Cellular Company Still In Talks With Apple (AAPL)
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Apple (AAPL) has a deal with China Unicom (CHU) to sell its iPhone on the mainland. The deal, however, is not exclusive. The head of China Mobile (CHL), which has 500 million subscribers and is the world’s largest cellular company, says his firm is in talks with Apple about selling the iPhone, which would give the US company a second partner in the world’s most populous nation.
A deal with China Mobile could transform Apple’s already successful handset business. Apple sold just over 5.2 million iPhones in its last quarter. The distribution of the product in Asia is almost non-existent.
Revenue from the iPhone was nearly 20% of Apple’s total sales in the period that ended June 27. This does not include some deferred revenue attached to sales through AT&T (T). The iPhone is by far Apple’s fastest-selling product. The company’s ability to continue double-digit sales growth almost certainly hinges on the iPhone’s future, as the sales growth of the iPod and Mac slow.
It is impossible to predict what a relationship with China Mobile could do for Apple, but a 2% penetration of the cellular company’s customer base would be worth 10 million new unit sales a year.
Apple’s future may not depend as much on its traditional markets in the US, Europe, and Japan as much as it does on China. A partnership with China Mobile would cement that.
Douglas A. McIntyre
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