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China Telecom deal viewed as $9B revenue opportunity for Apple

post #1 of 15
Thread Starter 
Recent reports that China Telecom will begin offering the iPhone by the end of the year have prompted investment firms to crunch the numbers on the deal's potential revenue opportunity, with one analyst arriving at a figure of $9 billion.

"We are believers," Ticonderoga Securities analyst Brian White wrote in a note to investors on Wednesday, referring to a report on Tuesday that claimed China's third-largest wireless operator will likely launch the iPhone in November.

White went on to note that, despite being dwarfed by competitor China Mobile, China Telecom still has more CDMA subscribers than Verizon Wireless. As of May, the mainland Chinese carrier had 105.7 million wireless subscribers.

According to the analyst, a conservative estimate of the total number of high-end subscribers on China Telecom is 13 to 15 million. That subscriber base would represent a near-term revenue opportunity of $8-9 billion.

However, taking a broader view of the market could signal substantially greater revenue potential. For instance, counting the entirety of the carrier's current 3G user base of 19.7 million subscribers as potential iPhone customers could represent a $12 billion market opportunity, while China Telecom's entire subscriber base could bring Apple as much as an estimated $66 billion in revenue.

White has, for some time now, followed developments of potential partnerships between Apple and carriers in China. As early as last year, his sources pointed to a deal between the iPhone maker and China Telecom. Earlier this spring, Chinese media reports emerged indicating that the carrier had been testing the iPhone on its network.

"We continue to view the ramp of China's mobile Internet as one of the most exciting investment areas in the tech world over the next decade," the analyst said, adding that Apple could be "one of the biggest beneficiaries" of the boom. White estimates the high-end mobile phone market in China poses a $70 billion revenue opportunity for China.

China Unicom began selling the iPhone in 2009 and got off to a slow start, due in part to a thriving unofficial grey market for iPhones, as well as the fact that government regulators blocked the inclusion of Wi-Fi on the device.

But, the iPhone's popularity in the country improved last year, culminating in the launch of the iPhone 4 last September, which drew thousands of customers, including a number of scalpers. Strong demand for the handset led to it being sold out for months.

As Apple's iPhone has become a sought-after handset in the country, China Mobile and China Telecom have grown eager to begin carrying the device. "The reason telecom operators are fighting for the iPhone business is because everybody is trying to grab as many 3G users as possible," Reuters reported analyst Jane Wang as saying. "The only way to keep costs down is to build up such a user base."

China Mobile is also expected to begin selling the iPhone later this year, though Apple would have to add support the carrier's home-grown 3G TD-SCDMA network.

Last week, AppleInsider uncovered an unverified photo purportedly showing an iPhone 4 running on China Mobile's 3G network. Additionally, Apple COO Tim Cook was reportedly seen visiting the wireless operator's headquarters last month, fueling rumors that the two companies are nearing a deal.



According to Cook, the iPhone maker is "on a tear" in China, posting 250 percent year over year growth last quarter. The company has forged much of its emerging market strategy in China and hopes to recreate its successes in other countries.

China represents the world's largest wireless market with 896 million mobile phone users. The bulk of its subscribers elect for pre-paid payment options rather than the subsidized post-paid plans more common in the U.S.

Recent reports have suggested that Apple has developed a cheaper iPhone meant to capitalize on China's emerging market. According to one survey, 53 percent of Chinese 3G phone buyers would choose the iPhone if its price was lower.
post #2 of 15
How are the other phone player doing in China? Is Android already there?
post #3 of 15
Quote:
Originally Posted by McDavies View Post

How are the other phone player doing in China? Is Android already there?

must be HiPhone
http://saramobi.com/hiphone-a3-android.html

post #4 of 15
and Apple isn't going after these folks why?

- http://saramobi.com/clone/iphone.html
post #5 of 15
Quote:
Originally Posted by UMAIR View Post

must be HiPhone
http://saramobi.com/hiphone-a3-android.html


I'm getting my Hiphone "with" the Apple logo...
Hmmmmmm...
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Hmmmmmm...
Reply
post #6 of 15
Currently living in China and Apple is on fire here. Just about everyone wants an iPhone or iPad. Go Apple. My retirement account is counting on you!
post #7 of 15
Using the same perameters doesn't that make China Mobile deal worth about 6 x $9 billion, or $54 billion? Sounds like that might be worth Apple making a GSM/TD-SCDMA iPhone for this one MNO.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #8 of 15
Quote:
Originally Posted by FreeRange View Post

Currently living in China and Apple is on fire here. Just about everyone wants an iPhone or iPad. Go Apple. My retirement account is counting on you!

That's good to hear!

Funny how not too long ago many on this very blog were explaining that the Chinese couldn't afford Apple products
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
"Google doesn't sell you anything, they just sell you!"
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From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
"Google doesn't sell you anything, they just sell you!"
Reply
post #9 of 15
Quote:
Originally Posted by digitalclips View Post

That's good to hear!

Funny how not too long ago many on this very blog were explaining that the Chinese couldn't afford Apple products

Let's not forget…
  • Cloned phones are just as good, if not better, and cheaper than their brand name counterpart because they use the same engineers but you aren't paying for marketing.

  • The iPhone won't sell in the East because they are so far advanced than the US, especially in S. Korea and Japan where the phones have TV
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #10 of 15
Quote:
Originally Posted by solipsism View Post

Let's not forget
[*]The iPhone won't sell in the East because they are so far advanced than the US, especially in S. Korea and Japan where the phones have TV

That was one of my favorite ones, along with the one about those sophisticated Europeans (except for the French) who wouldn't stoop to 'touch' from their oh-so fancy Nokias.
post #11 of 15
Quote:
Originally Posted by anantksundaram View Post

That was one of my favorite ones, along with the one about those sophisticated Europeans (except for the French) who wouldn't stoop to 'touch' from their oh-so fancy Nokias.

You can't type on a virtual surface that's why slider phones will win out over the iPhone.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #12 of 15
Quote:
Originally Posted by solipsism View Post

You can't type on a virtual surface that's why slider phones will win out over the iPhone.

That one has at least a scintilla of validity. There are some people out there who will need to have keyboards prised out of their cold dead hands. I made the jump back with the original iPhone, but if somebody got Steve Jobs high enough for long enough to put out an iOS slider phone I'd really be tempted
post #13 of 15
Quote:
Originally Posted by cloudgazer View Post

That one has at least a scintilla of validity. There are some people out there who will need to have keyboards prised out of their cold dead hands. I made the jump back with the original iPhone, but if somebody got Steve Jobs high enough for long enough to put out an iOS slider phone I'd really be tempted

It doesn't have any validity as stated. I wrote "can't" and made no claim that physical keyboards don't offer their own benefits.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #14 of 15
Quote:
Originally Posted by solipsism View Post

It doesn't have any validity as stated. I wrote "can't" and made no claim that physical keyboards don't offer their own benefits.

The other ones aren't even partially true though, whereas that one at least is only an exaggeration not an outright fabrication. You get what I'm saying here.
post #15 of 15
Quote:
Originally Posted by solipsism View Post

You can't type on a virtual surface that's why slider phones will win out over the iPhone.

I'm still trying to wrap my head around how one types on a virtual surface.
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