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AT&T Renews Apple iPhone Deal; Confirms Subsidy Plan

Published on June 9, 2008
by Eric Savitz

AT&T (T) today confirmed that it will be subsidizing customer purchases of the Apple (AAPL) iPhone 3G. The subsidies are going to hurt AT&T’s 2008 and 2009 earnings; but at least AT&T will remain the exclusive U.S. service provider for the phone.

The company noted that the $199 price announced earlier today by Apple CEO Steve Jobs will require a two-year contract. AT&T will sell the phone at its more than 2,200 retail stores and kiosks, and through direct business sales teams.

The new deal eliminates the old revenue-sharing model, under which a portion of monthly service revenue was kicked back to Apple. Unlimited 3G data plans will be $30 a month, with voice plans starting at $39.99 a month. Business users can unlimited data plans for $45 a month, plus a voice plan.

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