iPhone drives first-quarter wireless growth for carriers

The iPhone has become a big business for Apple, with the company selling more than 35 million phones and taking in $22.69 billion in iPhone revenue over the last three months

The iPhone has become a big business for Apple, with the company selling more than 35 million phones and taking in $22.69 billion in iPhone revenue over the last three months. But it's also bringing in new customers for the wireless carriers that have partnered with Apple to offer the iPhone.

That's the conclusion one draws, anyhow, after getting a glimpse at the latest quarterly reports for U.S. wireless companies. Sprint was the latest to tout its iPhone success, revealing that it had activated 1.5 million iPhones when it announced its quarterly earnings on Wednesday.

Sprint's announcement follows earlier reports from AT&T and Verizon, the other national iPhone carriers in the U.S. On Monday, AT&T announced 4.3 million iPhone activations during the first quarter. The week before, as part of a conference call to discuss its quarterly earnings news, Verizon said it activated 3.2 million iPhones during the first three months of 2012.

Both AT&T and Verizon saw increases in the number of iPhones activations from the year-ago quarter. In the first three months of 2011, AT&T activated 3.6 million iPhones while Verizon activated 2.2 million in its first quarter as an iPhone carrier.

Impressive as those tallies are, digging a little deeper into the numbers reveals how important the iPhone is to each of the three carriers.

  • Twenty-one percent of AT&T's 4.3 million iPhone activations were new subscribers to the company, suggesting the iPhone is a main source of the company's growth. The iPhone does account for 78 percent of the smartphones AT&T sells.
  • As for Sprint, which only began offering the iPhone last October, 44 percent of the 1.5 million iPhones it activated this past quarter went to new customers. The 600,000 new users the iPhone brought in represented more than half of Sprint's overall increase of 1.1 million wireless customers.
  • On the same call where Verizon said it sold 3.2 million iPhones, the company also announced it sold 6.3 million smartphones overall. In other words, the iPhone made up more than half of Verizon's smartphone sales.

The popularity of Apple's phone does come with a cost for carriers. Each of the companies subsidizes the cost of the iPhone, taking a short-term loss on the cost of the device in exchange for profits over the course of a typical two-year service contract. Sprint reported Wednesday that its subsidy fees had increased by a half-billion dollars over a year ago--from $1.1 billion to $1.6 billion--thanks mostly to iPhone sales. The device, the company said in its earnings report, "on average carries a higher subsidy rate per handset as compared to other handsets."

But the increased costs come with increased sales. Sprint wasn't selling the iPhone a year ago, but the first quarter Apple phone sales represented an 700,000-unit increase over AT&T's 2011 quarterly results, and a million-iPhone jump from Verizon's year-ago sales.

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Joel Mathis

Macworld.com
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