Riding High In Its First Quarter, Verizon Said To Be In Talks For iPhone
CDMA wireless network USA Today
The long-speculated reports of a Verizon iPhone are getting hotter just as Verizon reported a strong first quarter. Verizon on Monday reported net income of $3.2 billion, up from $3.0 billion in the same quarter a year ago, a gain of 5.3 percent.
A Verizon iPhone could spell disaster for AT&T, which has enjoyed exclusive distribution rights to the iPhone in the United States since 2006, before it was even released. Verizon Wireless co-parent Vodafone already distributes the iPhone in Europe.
Last week, despite posting a loss of 9 percent in profits for its first quarter, AT&T topped Wall Street estimates thanks to the iPhone's effect on its wireless business. AT&T activated 1.6 million iPhone 3G devices during the quarter, the company said, and increased its overall wireless data revenue by 38.6 percent.
According to AT&T, more than 40 percent of the 1.6 million iPhone 3G subscribers were new to AT&T.
"Despite economic pressures, we had a solid first quarter," said AT&T CEO Randall Stephenson during AT&T's earnings call. According to reports, Stephenson has been actively pushing to extend AT&T's exclusive Apple iPhone contract beyond its 2011 expiration date.
Verizon itself beat Wall Street estimates for its current quarter, reporting a 12 percent increase in revenue, buoyed by its purchase of Alltel in January and a reported 1.3 million new customers in the quarter.
That brings the overall number of retail customers at Verizon Wireless -- which is co-owned by Verizon Communications and Vodafone -- to 84.1 million, according to Verizon, including the 13.2 million it acquired through Alltel. Verizon's Alltel acquisition allowed it to surpass AT&T earlier this year to become the largest wireless carrier in the U.S.
According to Roger Entner, the head of telecom research for Nielsen, a Verizon iPhone would "send shivers into AT&T's stock and senior leadership."
Quoted in USA Today, Entner expressed the same views held by most telecom analysts who closely watch the iPhone: AT&T would take the major hit, but more consumer choice between carriers for iPhones would make the device even more popular.