Analyst: Verizon iPhone will not be as big a disaster for AT&T as some might think

Parallels Desktop 6 for Mac “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.]

25 Comments

  1. I bought the first iPhone the day it came out and have upgraded the first day each new one has come out. I now have an iPhone 4 and so does my wife. Neither of us has ever surfed the web and talked on the phone at the same time. I bet we are more like most users than you are. It ain’t no big deal for most, I bet.

  2. @FutureMedia,
    It was reported a few months ago that Apple was working on a CDMA variant that will allow just that. You can guarantee that they won’t release a phone that doesn’t allow you to talk and surf at the same time.

  3. With all this speculation, you gotta wonder if any heads will roll if verizon doesn’t get the iPhone next year. They’ve been trying to figure apple out for quite sometime now and have not even gotten close. I guess if you write about long enough(what 4 years now and counting) it will eventually come true.

  4. @HughB

    It’s not just surfing the web, it’s any kind of data. I frequently have a conversation going while using Maps, which would not work on Verizon because I couldn’t search for a location while on a phone call, or pull up an email, etc. It is an important issue, especially for those of us who use our iPhones for our business.

  5. @HughB
    Just because you don’t see the use for a feature doesn’t mean that you have your finger on the pulse of users in general. I use data & talk simultaneously all the time as do the vast majority of iPhone owners that I know. Now, my friends and I may have a higher level of technical aptitude than you, or we may just be better multi-taskers. Either way, if Verizon can’t bring simultaneous talk & data to the iPhone, I’m inclined to believe it will have some impact on the potential for conversions from ATT – Except maybe for the people like you, who have the iPhone mostly because it’s a shiny bauble to improve self-esteem and perceived status in an otherwise pedestrian life – not because they know how to make the most of it’s features.

  6. @your average idiot

    I’m in the UK and have same usage patterns as you. Thankfully we can get a Pay-As-You-Go SIM card from O2 for £10/month ($15.60). Includes 300 texts, 500MB data and you use the full amount for calls. They also throw in around 20% extra call time for free. I can’t use the call time but the phone is essential.

  7. @John Smith
    Gosh I have never said anything bad about you. You make me feel bad. How did you know I am so shallow that I only want a shiny bauble and have a pedestrian life? I am afraid I am unable to know what kind of wonderful life you have, but I do know you are some kind of asshole. That I can recognize, even with my limited technical aptitude.

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