iPhone Sales Should Get a Modest Lift From T-Mobile
The iPhone’s imminent arrival on T-Mobile, the fourth largest wireless carrier in the United States, should give a nice little bump to Apple’s quarterly iPhone sales, though perhaps not as big a one as you’d expect.
News yesterday that Deutsche Telekom’s U.S. subsidiary has finally inked a deal with Apple inspired a scattershot of analyst estimates of just how many iPhones T-Mobile can sell in a year. Consensus seems to be upward of four million. In a research note this morning, RBC Capital‘s Amit Daryanani suggests Apple will see 4.8 million additional iPhones sold per year with T-Mobile on board as a carrier.
Sounds reasonable enough. Sprint sold 6.3 million iPhones during its first year with the device, outfitting about 20 percent of its postpaid subscribers. T-Mobile has about 24 million postpaid subscribers, so if it sells a similar percentage of them as Sprint, 4 million to 5 million incremental sales seems a pretty safe bet.
The problem is, T-Mobile plans to sell the iPhone unsubsidized. Which means subscribers who want the device have to pay full price for it. And full price can be pretty daunting.
For example, unsubsidized, the iPhone 5’s price ranges from $649 for 16 gigabytes of storage to $849 for 64GB. Now, it’s not yet clear if T-Mobile will require cash upfront for the iPhone, or if it will offer some sort of installment plan that will lessen the sticker shock it might inspire in some. Either way, there’s a wildcard variable here that will clearly have some impact on sales.
As Wells Fargo analyst Maynard Um observed, “While previous carrier launches of the iPhone would imply that T-Mobile could activate roughly 4.5 million iPhones, by our estimates, during its first year post-launch, we believe investors should temper expectations as the impact of Deutsche Telekom’s recent announcement that it will no longer provide subsidies on cell phone purchases with a contract is unknown.”