Why a Partnership Would Be a Huge Catalyst for Apple Inc. (AAPL) and China Mobile Ltd. (ADR) (CHL)

On July 31, Reuters reported that Tim Cook, Chief Executive Officer of Apple Inc. (NASDAQ:AAPL), recently met with executives at China Mobile Ltd. (ADR) (NYSE:CHL). Rumor has it the two sides discussed a potential partnership, which has been speculated in the financial media for months now. At long last, it appears that there is finally progress being made on a possible agreement, and if it materializes, represents a gold mine for both companies.

Strength in numbers

Put simply, China Mobile Ltd. (ADR) (NYSE:CHL) represents a huge opportunity for Apple Inc. (NASDAQ:AAPL). The numbers at play here are truly staggering, and are enough to convince any Foolish investor that this is exactly the catalyst Apple needs.

China Mobile Ltd. (ADR) (NYSE:CHL) is the world’s largest mobile telecommunications carrier by subscribers, serving more than 700 million customers. To date, China Mobile does not offer the iPhone, making it the only Chinese carrier to not yet provide Apple Inc. (NASDAQ:AAPL) devices.

China is clearly a priority market for Apple, whose penetration there would receive a significant boost from a partnership with China Mobile. Greater China already accounts for 13% of Apple Inc. (NASDAQ:AAPL)’s revenue, and that percentage should only increase going forward.

China is a member of the BRIC nations, a term signifying the emerging market nations that will lead global economic growth going forward. The expanding middle class in China is largely why the country continually posts strong GDP growth, as opposed to the United States, which is a much more mature economy with a relatively saturated telecommunications market.

Each company stands to benefit

China Mobile Ltd. (ADR) (NYSE:CHL) reported stagnant first-quarter 2013 profits, despite strong subscriber growth. That’s because high-quality 3G subscribers have been few and far between for the telecommunications giant. The carrier added approximately 26 million 3G subscribers in the first quarter, but wireless data traffic dropped nearly 8%, and China Mobile’s average revenue per user declined as well.

Apple Inc. (NASDAQ:AAPL), meanwhile, needs something to move the needle, too. A new iPhone is months away if not longer, and it’s clear the market is taking a wait-and-see approach to the stock during this lull in product cycle.

Apple Inc. (NASDAQ:AAPL) has rallied strongly over the past month, but its valuation multiple is still depressingly low. Apple trades for just 10 times trailing earnings, and even less if you deduct its massive $145 billion cash pile. Obviously, the market is not willing to award Apple with a market multiple unless the company can prove it has a clear, upward growth trajectory ahead of it.

China Mobile Ltd. (ADR) (NYSE:CHL), for its part, trades for just 10 times trailing earnings as well, according to Yahoo! Finance. The stock carries a $212 billion market capitalization, so, like Apple Inc. (NASDAQ:AAPL), a company this size needs something big to really move the needle.