Apple, China Mobile Deal Seems Imminent

Tickers in this article: AAPL CHL

NEW YORK (TheStreet) -- It's long been thought that a deal between Apple and China Mobile would allow the iPhone maker to ramp up its market share in China, the world's most populous nation. Judging by recent reportedly leaked images of China Mobile advertising, that deal is likely to happen sooner rather than later, meaning more iPhone sales than Wall Street expects.

Images first spotted by UnwiredReview show advertising for the newly released iPhone 5s and iPhone 5c coming to China Mobile's network, which has more than 740 million users. At the end of June, China Mobile had 137.9 million 3G users, which is the segment Apple is targeting.

There has been plenty of speculation that a deal between the two companies is imminent, especially with images of advertising popping up. The head of the MITT, China's telecom governing body, has already said that the license would be granted by the end of the year. But with Apple selling 9 million units of the new iPhones during a record-breaking opening weekend, a deal can't come soon enough.

Wall Street analysts are to some extent baking in a deal between Apple and China Mobile. However, given the fact that the opening weekend was so much better than many (including myself) expected, signing an official deal with the world's largest carrier would cause analysts to raise estimates.

A few analysts on Wall Street have already done this, including Goldman Sachs' Bill Shope, who raised his estimates earlier this week.

Analysts surveyed by Thomson Reuters expect Apple to earn $7.47 a share on $35.23 billion in revenue for the fiscal fourth quarter. It's unlikely that a deal between China Mobile and Apple would be materially accretive to the company's fiscal fourth quarter, given there are just six days left, but the all-important holiday quarter is where timing on a deal is important. If a deal happens as soon as mid October, as rumors suggest, that leaves Apple with roughly 45 days to sell its new iPhones to China Mobile's users.

It's particularly important for Apple to get more units of the gold iPhone 5s into China, as gold is seen as a very lucky color in the country. Currently, the gold version is sold out on Apple's Web site, with the 16 GB, 32 GB and 64 GB models all sold out until October. Apple is working hard to increase the amount of iPhone 5s units to meet demand.