Upside to Apple From Bigger China Play

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- China's largest wireless service provider China Mobile ( CHL) announced Monday that it now has about 15 million iPhone customers on its network. This is despite not having signed a formal deal with Apple ( AAPL) to sell the iPhone. China Mobile has a huge mobile subscriber base of more than 655 million, dwarfing its U.S. counterparts Verizon ( VZ) and AT&T ( T) by more than six times.

Apple has already signed deals with both China Unicom ( CHU) and China Telecom ( CHA) to sell the iPhone. With China nearing a billion-strong mobile subscriber base, signing a deal with China Mobile will present Apple with a huge opportunity in its quest to reach a trillion-dollar value.

See our complete analysis of Apple here.

China Mobile's proprietary TD-SCDMA 3G network has been a huge stumbling block in the way of an Apple-China Mobile iPhone deal. The network is incompatible with most smartphones currently available in the market, including the iPhone. This requires Apple to come out with a specially crafted iPhone for the carrier's proprietary network, and this has proved to be a huge deterrent.

However, with Qualcomm's recent announcement of a baseband chip that supports not only China Mobile's 3G network but also its 4G TD-LTE network, which is still under trials, it will finally be possible for Apple to release an iPhone on the world's largest carrier.

China Mobile has so far managed to overcome its 3G shortcomings by building out a nationwide Wi-Fi network. But the unavailability of an unsubsidized iPhone on the nation's largest wireless carrier is a serious deterrent to widespread 3G adoption. The fact that China Mobile has still managed to add about 15 million iPhone customers is testimony to the huge untapped potential.

Our estimates for Apple's market share do not take into account the availability of the iPhone on China Mobile's network. However, should it happen, the upside could be huge.

China Mobile had 10 million iPhone users in October 2011. In four months, it has added another 5 million, implying an addition of almost 1.25 million iPhone users to its network each month. For four months prior to October, China Mobile added 5 million iPhone users. So we can assume that the rate of adoption of unsubsidized iPhones on China Mobile's network has been fairly constant.

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