“UBS Securities analyst John Hodulik writes this morning that the end of AT&T’s exclusive deal for Apple’s iPhone, which he believes along with the Street will end Q1 of 2011, when Verizon Communications gets its own iPhone deal, will not be as big a disaster for AT&T as some might think,” Tiernan Ray reports for Barron’s. “In fact, Hodulik raised his EPS estimate on AT&T next year despite higher churn, and lowered his EPS estimate for Verizon despite higher gains.”
“Out of a total of 22 million iPhones to be activated on a post-paid basis in 2011, AT&T will sell just 9 million, or 40% of the gross ads, writes Hodulik, while Verizon will garner 60%, starting in Q1, for a total of 13 million post-paid additions,” Ray reports. “The result, Hodulik believes, is that AT&T’s spending on subscriber additions can go down, assuming it still spends $400 per iPhone to subsidize the device, leading to $2.8 billion less that the company needs to spend. That means slower growth for AT&T… But the net result is EPS of $2.55, ten cents higher than Hodulik was previously modeling.”
Ray reports, “Hodulik writes that Verizon has already been cutting costs in its wireless division, trying to prepare to absorb the added expense of the iPhone subsidy.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]