China Mobile Ltd. (CHL) HKG:0941 will start selling Apple Inc. (AAPL - Get Report) iPhones on December 18 th along with the launch of its 4G TD-LTE service, reports Xinhua News Agency, China’s official press agency. Analysts Peter Misek, Jason North and Billy Kim at Jefferies note that those who maintain a sell position on Apple may not have considered the China Mobile effect yet, which will give some tailwind to fiscal 2014 earnings estimates.
Estimates do not include China Mobile iPhone units
Apple Inc. (AAPL - Get Report) and China Mobile Ltd. (CHL) HKG:0941 have been in talks for a while now, and Apple is reportedly developing a device compatible with China mobile's 4G network, according to the release. It is also mentioned that China mobile will launch 4G TD-LTE service first in Beijing, Guangzhou and Chongqing, eventually followed by Shanghai as it is still working on its 4G network.
The analysts feel that most of the street estimates have not yet included China Mobile iPhone units. "As a result, we believe there is a tailwind to FY14 estimates Jef 172.4M units and $99.1B revs, St $98.4B revs with FQ2 Mar Jef 40.8M units and $24.2B revs, St $24.4B revs seeing some upside due to the TD-LTE launch ahead of Chinese New Year," says the report.The Apple Inc. (AAPL - Get Report) and China Mobile negotiations have had to overcome many hurdles, such as incompatibility with China mobile's 3G TD SCDMA and premium pricing of iPhones, owing to which the network carriers have to provide subsidies to make them affordable. The recent launch of baseband chipsets by Qualcomm has solved the technical glitch by making China Mobile's 3G network and also its upcoming 4G TD-LTE network accessible.