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Here’s how Apple will make an extra $13 billion in 2014

Published Dec 23rd, 2013 6:45PM EST
China Mobile Apple Deal Value

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It finally happened: Apple’s iPhone 5s and iPhone 5c will soon be available from the world’s largest wireless carrier, China Mobile. Apart from an immediate end to all of the speculation, which we certainly appreciate, the deal means big money for both Apple and China Mobile as the latest iPhone models will soon be sold directly to China Mobile’s 763 million subscribers — or, at least a potentially healthy portion of its 181 million 3G subscribers. How much money is the deal worth to Apple? According to one industry watcher, the China Mobile agreement is worth as much as about $13 billion in additional revenue in 2014 alone.

Cantor Fitzgerald analyst Brian White on Monday morning issued new research to his clients covering the China Mobile deal and its implications. According to White, there is already strong demand for iPhones among China Mobile subscribers and it’s about to get stronger.

“Despite not having an official agreement with China Mobile before Sunday night’s announcement, we estimate there are 35-40 million iPhone users on the network at China Mobile,” White wrote. “Our visits to China Mobile branches, resellers and an Apple Retail Store this weekend in China highlighted that China Mobile is offering the iPhone 5S (and iPhone 5C) to customers; however, the new iPhones are only available on the 2.5G/2G network, but this will clearly change given Sunday night’s announcement.”

Moving on to some figures, White believes that Apple will sell between 20 million and 24 million iPhone handsets through China Mobile in 2014. Using Apple’s current estimated average selling price of $525 for the iPhone in China, that would mean up to an additional $12.6 billion in revenue. According to White, the deal will add an additional $4 to Apple’s EPS in calendar 2014, or nearly $3.6 billion in profit.

White reiterated his Buy rating on Apple shares with a $777 price target.

Zach Epstein
Zach Epstein Executive Editor

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content. Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment.

His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.