How much money do carriers make from the iPhone?
Enough that they won't be cutting the $400 subsidy any time soon, says Apple analyst Shaw Wu of Sterne Agee in a new note this morning.
Wu met with Apple's CFO Peter Oppenheimer, and head of Internet services, Eddy Cue. After his talk with Apple's execs he doesn't think carriers are cutting subsidies.
Here's why:
One of the most topical issues these days is on carrier subsidies. Similar to what was said on its conference call, AAPL believes that the iPhone provides a lot of value to carriers with the industry's lowest churn rate of under 2%, efficiency with data, and propensity to drive family plans which have higher RPU. In addition, from our take, a $400 subsidy is relatively minor when a carrier is able to collect $1920 in revenue over a 2 year period when signing up a customer to a typical voice+data monthly plan for $80 that it otherwise may not acquire. We believe concerns over lower carrier subsidies is overblown and in addition believe a carrier cannot afford to not carry iPhone as it risks losing market share to a carrier who does.
