Munster Gives His Two Cents on China Mobile-Apple Deal
Analyst Gene Munster from Piper Jaffray is optimistic that Apple (NASDAQ:AAPL) will reach a deal with China Mobile (NYSE:CHL) sooner rather than later. He has estimated that a deal with China’s largest wireless carrier would add 5 percent to Apple’s revenue in 2014.
Munster said in his latest report, seen by Wall St. Cheat Sheet, “We believe that Apple could sell 17 million total iPhones on China mobile in the 2014, which should add 5% to Street revenue estimates.”
This estimate comes after reports about a website where customers could preorder an iPhone 5S or 5C through a China Mobile affiliate located in the city of Suzhou went live on Monday night local time. The site was taken down by Tuesday night, and a China Mobile spokeswoman told reporters that China Mobile has not yet reached a deal with Apple, so the site could have been a hoax.
Munster said Piper Jaffray believes that Apple will make a deal with China Mobile by the March 2014 quarter. The 17 million figure estimate represents 2 percent of China Mobile’s subscriber base.
While the high price of Apple’s smartphones makes them inaccessible for many Chinese customers, who typically have to buy smartphones at full price, Munster notes that China Mobile’s unsubsidized devices are cheaper than those U.S. carrier Verizon Communications (NYSE:VZ) offers. The average unsubsidized smartphone cost on China Mobile is $270, compared to $449 at Verizon. The iPhone 5C costs $718 and the 5S costs $846 through Verizon, but Munster believes China Mobile may be able to offer lower prices.