Apple Finally Ready To Announce China Mobile Deal

12/5/13 9:47AM EST

Apple Finally Ready To Announce China Mobile Deal Apple Finally Ready To Announce China Mobile Deal

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Apple Inc. (NASDAQ:AAPL) has finally secured a deal that will see the iPhone become available on China Mobile according to a report from the Wall Street Journal. The deal has been one of the most anticipated in recent months and its announcement will come as little surprise to those following Apple. Expectations have, however, cut into the upside from the news.

Shares in Apple Inc. (NASDAQ:AAPL) have been on a promising run in recent weeks. The company’s stock has increased in value by more than 8 percent since November 20. Much of that rise has come on the back of positive iPhone sales figures, hope of a bigger share buyback, and the expectation of a China Mobile deal. In pre-market trading Apple shares moved by a little over 1 percent on the news.

Apple Signs China Mobile Deal

The Wall Street Journal piece sourced people familiar with China Mobile’s plans. According to the paper, China Mobile is likely to announce the deal at a December 18 event. The company is going to announce its fourth generation wireless network on the same day. Executives from the company previously stated that they would hold off on  deal to secure the iPhone until it had developed its fourth generation network

China Mobile is one of the only major carriers in the world that does not offer the iPhone to its customers. Apple Inc. (NASDAQ:AAPL) shareholders will be hoping that the device’s inclusion in the China Mobile line-up will lead to a boost in sales in China. The company’s performance in east Asia has suffered in recent years as lower priced alternatives become increasingly available in the China.

Trefis reckons a China Mobile deal could result in the sale of around 1.5 million iPhones every month, That means 20 million smart phones in a year, a substantial boost in the company’s sales. Shareholders will be pleased if the company can hit that numbers, but there is little to suggest that the deal represents a massive change in Apple business.

China Mobile And iPhone Growth

China Mobile will not make the iPhone a home run for Apple Inc. (NASDAQ:AAPL) in 2014, but it will help the company along. The iPhone is the single most popular smart phone range of all time. China Mobile could not hold out forever. In order to really drive growth, however, Apple is going to have to try something a little more drastic.

Apple needs to increase the value of the iPhone in order to keep margins on the device high. The firm doesn’t seem all that concerned with that, however, it seems alright with simply slowing the margin decline for the time being. This makes sense if Apple has another product line on the way, or if it is planning a change in its business focus.

Apple Inc. (NASDAQ:AAPL) will soon have its products available to a much bigger market segment. That’s a good progression for shareholders, but the deal has been built into the company’s stock price for a while. Apple investors will have to look elsewhere for upside.

Disclosure: Author represents that he holds no position in any stock mentioned at the time this article was submitted.