July 19th, 2007
AT&T paying Apple $3 a month for every iPhone customer?
The details of AT&T’s iPhone revenue sharing pact with Apple are secret, but one thing is certain: It’s bound to be lucrative for Steve Jobs & Co.
Piper Jaffray analyst Gene Munster issued a research note Thursday that puts some estimates on the AT&T-Apple revenue sharing deal.
According to Munster AT&T is paying $3 a month per every iPhone customer already with AT&T and $11 per month for every new subscriber. If you add that up over the 24 month contract it adds up for Apple, which is also making money on the actual iPhone sale.
For calendar 2007 this deal adds 2 cents a share to Apple earnings. In 2008, the revenue sharing pact adds 15 cents a share. And 2009 has the real bang: 58 cents a share added to Apple’s bottom line.
Munster writes in a research note:
We believe the monthly revenue sharing involves $3 per month for service and data fees related to all iPhone users, and AT&T gives Apple an additional $8 per month for iPhone customers who transfer service to AT&T in order to use the iPhone (see reviews, galleries).
While Munster’s analysis may be off a bit it makes a lot of sense. AT&T would pay less to Apple for migrating existing customers to the iPhone. Yet AT&T would have incentives to upsell customers so it could gain revenue on the data plan.
Apple reports earnings for the quarter ending June 30 on July 25. According to Thomson Financial Apple is expected to report earnings of 72 cents a share on sales of $5.28 billion.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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