Good News for Apple Inc. (AAPL): China Mobile Ltd. (ADR) (CHL) Goes All-In With 4G

Source: VentureBeat. 

Apple Inc. (NASDAQ:AAPL) grew sales in China from $4.08 billion in 2011 to $6.83 billion last year — a 67% increase. The company needs a fresh boost to fight Samsung, and bringing the iPhone on China Mobile’s new 4G network may be just the thing. With Chinese telecoms starting to focus on 4G networks, Apple Inc. (NASDAQ:AAPL) will have more of chance to sell its phone in the country. Although China Telecom already has the iPhone, 4G coverage could help spur new phone purchases, including Apple’s latest handset.

Two steps forward, one step back
Once China Mobile Ltd. (ADR) (NYSE:CHL) launches the 4G network, it will likely subsidize new phones to draw in customers. The company said that subsidies will increase by 13% this year compared to last year. China Telecom increased subsidies early last year, which cut into its profits, and investors can expect some of the same with China Mobile.

The company is investing a total of $30 billion in its network infrastructure this year. Add to that the possible subsidies for premium 4G handsets like the iPhone, which may force China Mobile to sacrifice profits in the short term for long-term gains. Investors should see China Mobile’s 4G expansion as a necessary expense, and a positive sign of the company’s long-term future.

The article Good News for Apple: China Mobile Goes All-In With 4G originally appeared on Fool.com and is written by Chris Neiger.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and China Mobile.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.