Verizon iPhone A Game Changer Only With New iPhone

The iPhone has come to Verizon after a long wait and will definitely benefit the mobile carrier. But the initial response to the iPhone 4 on Verizon has not been enthusiastic. Meanwhile, AT&T, which no longer has exclusive contract with Apple is looking to bring in more Android devices including HTC’s Facebook phones. Let’s take a closer look.

Recent Financials for Wireless Carriers
Sprint (NYSE:S) with annual revenue of $32.5 billion, reported fourth quarter revenue of $8.3 billion, up 6%. Net loss was $929 million or $0.31 per share, and the company ended the quarter with about $5.5 billion in cash. It gained 1.1 million net subscribers in the quarter to reach a total base of 49.9 million subscribers. Churn was 1.86% vs.1.93% last quarter and 2.11% last year. The stock is trading around $4.46 with market cap of about $13.34 billion. It hit a 52-week high of $5.31 on May 25 of last year.

T-Mobile USA, which was the first to launch the Android OS, reported third quarter revenue of $5.35 billion, down slightly from $5.38 billion last year. Net income was $320 million, down from $417 million last year. The company added 137,000 customers in the quarter, compared to a loss of 77,000 customers last year and 93,000 last quarter. Its total subscriber base stands at 33.8 million. Churn was 2.4%, up from 2.2% last quarter and consistent with last year.

AT&T (NYSE:T) reported fourth quarter revenue of $31.5 billion, up 2.1% y-o-y and beating analyst estimates of $31 billion. Net income was $1.1 billion or $0.18 per share compared with $2.7 billion or $0.46 per share last year. Annual revenue grew to $124.3 billion and the total subscriber base was 95.5 million. During the quarter, AT&T added 2.8 million subscribers, and wireless revenue increased 9.9% to $15.2 billion. Postpaid churn was 1.15%. AT&T also added 442,000 iPad- and Android-based tablets to its network, a new growth area for the company. AT&T is trading around $28 with market cap of about $167 billion. It hit a 52-week high of $30.10 on January 5.

Verizon (NYSE:VZ) reported fourth quarter revenue of $26.4 billion, down 2.6% and missing analyst estimates of $26.5 billion. Net income was $2.64 billion or $0.93 per share compared to $617 million or $0.22 per share last year. Annual revenue was $104.4 billion, and the total subscriber base was 94.1 million.  During the quarter, Verizon added 955,000 net subscribers, including 872,000 contact customers, and wireless revenue increased 5.7% y-o-y to $16.7 billion. Verizon continues to have the lowest churn in the industry at 1.01%. The stock is trading around $36 with market cap of about $102 billion. It hit a 52-week high of$37.70 on January 5.

Verizon said it expected to sell 11 million iPhones in the coming year but would not bank entirely on the iPhone partnership with Apple to prop up the company. At year-end 2010, 26% of Verizon Wireless’s retail postpaid customer base had smartphone devices, up from 15% last year. In the fourth quarter, more than 75% of Verizon Wireless’s postpaid net adds were smartphones. That is a smaller share than for rivals AT&T, Sprint, and T-Mobile, which each hover closer to 40%.

Don Resinger  on eWeek lists 10 reasons why the iPhone is coming at a great time for Verizon. However,
Joe Aimonetti on CNet and Paul Hartscock on Tech News World report that the recent launch of the iPhone on Verizon was not met with much enthusiasm, perhaps because of the extremely cold weather across much of the United States and because it is not a new model. Apple is expected to release the iPhone 5 this summer, and in all probability it will be released simultaneously on both AT&T and Verizon. Few people would be willing to buy an old model and sign up for a two-year subscription. So Verizon users – me included –  are waiting for a current model iPhone to come to Verizon.

AT&T meanwhile is leaving no stone unturned to hold on to its iPhone users and be stiff competition. In its final exclusive iPhone quarter, it reported 4.1 million iPhone activations. To keep its customers, AT&T is giving out iPhone 3GS for $49 with 1,000 free rollover minutes. It is also adding exciting Android devices to its lineup, including the HTC Inspire 4G and the Motorola Atrix.

Android did extremely well on the other carriers while iPhone was available exclusively on AT&T. Sprint HTC EVO 4G, according to Mathew Miller, is one of the best Android devices, and it has helped even Sprint stop its subscriber losses. HTC recently released a tablet and two phones with a Facebook button. These devices are based on the Android and will be available on the AT&T network.

While getting the iPhone on Verizon was an important move, it would probably have served it better to get the latest release. AT&T is giving Verizon tough competition by trying to retain its customers and getting great phones in its lineup. Verizon cannot afford to depend on the iPhone, it also needs to offer the latest trends and technology in smartphones.