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Wonder How Verizon Feels About Passing on the iPhone, Now …

Published on October 22, 2008
by John Paczkowski

If Apple, as CEO Steve Jobs said yesterday, is now the world’s third largest mobile phone supplier in terms of revenue, what does that mean for AT&T, the exclusive carrier of Apple’s sole mobile phone in the states? Largely good things, according to the company’s third quarter results.

Apple (AAPL) activated some 2.4 million iPhone 3Gs in the quarter, with about 40 percent of them going to new customers. Unfortunately, these robust sales actually tempered earnings growth because AT&T (T) is so heavily subsidizing the device’s upfront purchase cost. AT&T posted earnings of $3.2 billion, or 55 cents per share, for the third quarter, up from a profit of $3.1 billion, or 50 cents per share during the same period last year. iPhone subsidies, however, cost it 10 cents a share. But that’s money well spent, according to AT&T, which says iPhone owners generate more revenue per person for the company than the typical wireless customer and are less likely to cancel service. And the company’s got 50.5 percent growth in wireless data revenues from Internet access, messaging, email and related services, and 15.4 percent growth in total wireless revenues to prove it.

“I am particularly pleased with the customer response to the iPhone 3G,” AT&T CEO Randall Stephenson said in a statement. “The new customers we’re winning are high-value, with attractive revenue and churn profiles. We’re expanding the market, as users adopt more data and media-rich services and access a wide array of applications. These achievements are positive for the future of our business.”

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