The carrier will add an estimated 1.2 million new accounts, more than double AT&T's
"Santa's Sleigh Needs More Room for iPhones." That was the headline on a note to clients Thursday by Mark Moskowitz, who follows Apple (AAPL) for J.P. Morgan. Moskowitz was upping his iPhone sales estimate for the current quarter from 25.3 million to (a still relatively conservative) 28 million.
"Christmas Is Coming Early for Verizon" could have been the headline for Friday's note by Moskowitz' colleague Philip Cusick, who covers telecom services and towers for J.P. Morgan.
Cusick predicts that thanks largely to the iPhone, new postpaid (i.e. subsidized) cellphone accounts among the four major U.S. carries will be up 54% from last quarter. And of that 54%, he expects Verizon to get the lion's share. He estimates:
Verizon (VZ), which got the iPhone in February, will add 1.2 million new accounts
AT&T (T), which has had it since 2007, will add 450,000
Sprint (S), which got the iPhone last month, will add 250,000
T-Mobile (DTE.DE), which does not sell the iPhone, will lose 400,000 accounts
"Verizon is benefiting against all carriers compared to the third quarter," Cusick writes. "iPhone sales seem to be tracking well above carrier and vendor expectations and could negatively impact margins in 4Q."
That last bit -- higher sales hurting profit margins --may seem counterintuitive, but the carriers are set up to lose money on the phones they subsidize and take their profits later, in monthly fees collected over the life of a contract.
This is important because the subsidies on Apple's phones are particularly high. Cusick estimates that the average iPhone subsidy is $350 at Verizon, $375 at AT&T and close to $400 at Sprint. This compares to about $150-250 on similar Google (GOOG) Android devices.
Cusick's note is chock full such insights. Quoting from his summary:
Note that although Cusick expects Verizon to add more new accounts this quarter, he expects AT&T will sell more iPhones. Presumably that's because compared with Verizon, AT&T has millions more existing iPhone customers, many of whom will be upgrading to the iPhone 4S for the holidays.
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