Wireless carriers are losing money selling new iPhones

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For every iPhone sold under their aggressive, new renewal plans, dueling carriers Sprint and T-Mobile are spending between $ 200 and $ 250, according to an initial estimate by New Street Research.

That’s about half the average subsidy of around $ 450 a few years ago that desperate carriers were funding for new iPhones, which retail for $ 650 and up, noted Jonathan Chaplin, an analyst at the firm.

While T-Mobile had weaned itself off subsidizing the iPhone entirely last year, this week’s $ 5-a-month “Jump On Demand” lease plan for the iPhone 6s was triggered by Apple’s own offer of a $ 32-a-month yearly renewal plan earlier this month.

T-Mobile, which has been growing rapidly as it pitches beefed-up service at lower rates, won’t see a big dent to its cash flow, Chaplin predicts.

Sprint, on the other hand, which has foundered since Japan’s SoftBank acquired it two years ago, could face a bigger impact as it hawks a $ 1-a-month lease for the iPhone 6s.
“This isn’t a huge event on its own — it’s just another step in the wrong direction,” Chaplin says. “Competitive intensity is going up, and the cost of subscribers is going up.”

Late Thursday, Verizon entered the fray with a yearly iPhone upgrade program. Despite higher monthly payments, Verizon tweeted that its plan was on “the best network.”

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