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In this edition of Views and News, we look at the major wireless carriers' year end financial results, and consider whether their massive financial bet on smartphone profitability will bear fruit.
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Wireless earnings roundup: Smartphone sales skyrocket, but will the carriers' bet prove out?
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One year ago, after Verizon announced that it would begin selling Apple’s iPhone, ETI predicted (Views and News, January 2011) that the big winner as Verizon and AT&T would now be vying for iPhone subscribers would be ... Apple. All of the Big-Four wireless companies have now reported their 2011 year-end financial results. While revenues and subscribers were up, profit margins were distinctly lower, as costly smartphone subsidies cut into the carriers’ bottom line. Meanwhile, Apple announced record profits, driven by massive sales of iPhones. The carriers continue to suggest that its only a matter of time before these smartphone subsidies turn into profits, but with device manufacturers rolling out newer and better phones several times each year, and with even stronger consumer expectations of “new every two” promotions, those long-awaited smartphone profits are looking more like that pot of gold at the end of the rainbow.
T-Mobile is the only major carrier without an iPhone deal. Instead, it has been aggressively marketing Android phones with HSPA+ advanced data speeds. T-Mobile’s fourth quarter earnings announcement made it clear that carriers were in a “damned if you do, damned if you don’t” position. AT&T, Verizon, and Sprint all suffered as a result of having to fork over huge sums to Apple for iPhones, recovering only a fraction of those outlays in up-front payments by customers. T-Mobile, on the other hand, lost over 800,000 subscribers in just the fourth quarter, in part because it didn’t offer the iPhone.
Continue reading at econtech.com
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About ETI. Founded in 1972, Economics and Technology, Inc. is a leading research and consulting firm specializing in telecommunications regulation and policy, litigation support, taxation, service procurement, and negotiation. ETI serves a wide range of telecom industry stakeholders in the US and abroad, including telecommunications carriers, attorneys and their clients, consumer advocates, state and local governments, regulatory agencies, and large corporate, institutional and government purchasers of telecom services. |
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