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.]


  1. Anyone who believes that Verizon is in any way better than AT&T is kidding themselves. The iPhone won’t overwhelm Verizon’s network the way it did AT&T’s because there will be two carriers handling the iPhone load instead of one. And AT&T’s network load will be reduced because of defections to Verizon. The net result is that iPhone users will benefit from the addition of a second iPhone carrier. But then, we all knew that the day that Apple announced their exclusive deal with AT&T.

  2. Well duh, Verizon has user hostile pricing and contracts.

    I would have never thought I’d say this over a year ago when I ditched AT&T, but I’d rather have AT&T on my iPhone than Verizon.

  3. Dumbasses.

    ATandT does not subsidize anything. They charge a downpayment for the phone and then ‘loan’ the consumer the money to buy the iPhone which is paid back in installments, plus a data service fee.

    If you call that a ‘subsidy’, a giveaway, you’re a total dumbass.

  4. When Verizon sells iPhones the Android and RIMM Blackberry (almost) smart phones will be crushed. If 1/2 the iPhones are on Verizon, that will lighten up on AT&T’s network. As both fight for iPhone customers, the cost will drop for the users. And, EVERYONE WILL HAVE TETHERING AND FACETIME AT ALL TIMES!

    I see good times coming for us and RIMM will be doing a “Buy 1 take as many as you want” sales pitch!

  5. @Jersey
    You are smoking something if you really expect half the phones Verizon will sell will be iPhones. Lets face it, Android is here to stay and will remain the biggest seller at Verizon and possibly even at AT&T. iPhone will do very well, but I would be shocked to see it anywhere near 50%. How many iPads has Verizon sold so far? Not many I have heard. No lines there for iPads in my neighborhood.

  6. I’ve been a Verizon customer since Mama Bell (lineage.) I have had good land-line service, until they decided they didn’t want to support land-lines anymore. I have had good mobile service with a minimal contract (the cheapest they’ve had for extremely low use), and still have to pay exorbitant fees.
    I was born in the first half of last century, and my cell-phone use has been for travel, emergencies, and for trying to synchronize meetings. I have had the same phone for more than twelve years (Motorola, original battery) and have probably used the phone about 500 minutes since purchase. My fees have been about $3500 for this service.
    I’ve had my 3G iPad since May. There was online hookup, no hookup charge, no contract, online billing, free online account checks, and nearly perfect service. I’m looking forward to a modest upgrade in monthly mobile phone fees by purchasing a new iPhone. This phone is small enough for me to carry it all the time. . . . And I think I’ll move over to AT&T.

  7. @X – Since the price for service from AT&&T is the same after the contract expires, when was my repayment of the loan received by the carrier? Answer – Never, because the iPhone was subsidized.

  8. @hughb

    You may not use it, I do alot.
    Not surf web while on a call, but finding some info on my iPhone.

    Getting a phone number/email for someone, or something similar.
    A guy at work, ended a call with his wife, opened up his contacts, wrote an address down, called his wife back and gave her the address. I laughed.
    Also cause his wife didn’t answer right away either.

    Bieng able to multitask on my iPhone is another reason I wouldn’t go to verizon.

    When I do the multitask in front of others, I always get dirty looks. They know they can’t do it.

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