Credit: Shutterstock photoChina Telecom could begin offering Apple's ( AAPL ) iPhone by the end of this year in a deal that could represent a $9 billion opportunity for the tech giant according to recent reports. We believe that this deal could give Apple an opportunity to expand its presence in emerging markets like China and challenge Google ( GOOG ) Android based phones, Research in Motion ( RIMM ) and Nokia ( NOK ) in the emerging market smartphone market.
Given that Apple's iPhone accounts for over 50% of valuation, positive news here will likely move the stock. Our $430 price estimate for Apple stock is about 20% above market price.
China Telecom Adds to Strong Growth in China
We estimate that Apple has a market share of close to 3% for all mobile phones sold. Apple has experienced rapid growth from the China market in the past from its agreement with China Unicom to sell iPhones. According to Apple, revenues from Greater China increased about 3x in fiscal year Q2 2011 compared to the same period of last year.
China is the largest mobile subscriber market in the world and China Telecom has about 106 million subscribers. Out of these, about 13 to 15 million subscribers are considered high-end subscribers.
We estimate that worldwide Apple will be able to sell more than 106 million iPhones in 2012. If we assume that all of China Telecom's high-end subscribers end up buying iPhone, Apple could sell around 120 million iPhones in 2012 much more than what we estimate. This means that Apple's worldwide market share could increase at a faster rate in 2012 to reach around 7% instead of 6% that we estimate. This scenario alone adds around 5% upside to our price estimate for Apple stock.
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See our complete analysis for Apple stock here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
