China Mobile’s 4G Explosive Growth Is Positive For Apple 

China Mobile ’s 4G user base is experiencing explosive growth. February of this year was the first month that it supported the faster technology (a month after it started to officially support Apple AAPL +1.18%’s iPhone 5c and 5s) and it signed up 1.3 million customers that month. It has added more customers each month than the prior month for eight consecutive months cumulating with 13.5 million new 4G customers in October for a total of 54.5 million.

China Mobile has 801 million total wireless customers, which is 62.5% of China’s 1.28 billion wireless users (and has been the same percentage for over a year). These compare to 174 million smartphone users in the US and 242 million total cell users percomScore SCOR +1.81%’s latest data.

While Apple has been late with introducing large screen iPhones its timing of the iPhone 6 and 6 Plus with China Mobile’s 4G rollout couldn’t have been better. Apple has had mid-teens market share in China per Kantar the past six months and not having larger screen iPhones has kept it from increasing its share.

Each 1% share gain is $8 billion in revenue and $0.25 in EPS

With 1.28 billion total users each 1% share gain is equal to almost 13 million iPhones (Apple sold a total of 169 million worldwide in fiscal 2014) and about $8 billion in revenue. While this metric is measured off the install base vs. how many smartphones are sold to give some perspective what this means to Apple financially each $8 billion in revenue adds almost 4.5% to Apple’s total revenue growth rate and $0.25 in EPS vs. $6.45 in EPS for fiscal 2014.

Apple’s China revenue barely grew year over year in the September quarter

China generated $29.8 billion in revenue in fiscal 2014 which grew 17% year over year but its $5.8 billion in September quarter revenue only grew 0.8%. This was more than likely due to the difference in iPhone launch timings. Last year the iPhone 5c and 5s were available in the initial September launch at China Telecom and China Unicom but not until October for the iPhone 6 and 6 Plus.

Could Apple’s iPhone 6 success in Japan translate to China?

Apple’s iPhone 6 has consistently been the best selling smartphone in Japan since it was introduced in September. For the month of October Apple’s iPhone 6 dominated by holding the top 6 positions for smartphone sales and 9 of the top 14 after gaining the top 3 and 6 of the top 9 in September, even though it had only been on sale for 12 days. Its strength continued in November by holding 3 of the top 4 positions during the month. If the iPhone 6′s success in Japan is any indication on how Apple is doing in China it will help the companyhit 70 million iPhones sold in the December quarter.

Source: Forbes – China Mobile’s 4G Explosive Growth Is Positive For Apple

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