Whether or not Apple renews its exclusive iPhone contract with AT&T for the coming year, several million iPhone buyers helped AT&T beat the street in its most recent earnings report.
AT&T’s first-quarter profit, prior to a previously announced billion-dollar charge to cover the anticipated cost of U.S. healthcare reform, was 59 cents per share. That’s about 10 percent higher than Wall Street’s forecast of 54 cents.
“Now that they have a large enough base of iPhone users, investors are starting to see how profitable the device is for AT&T,” Piper Jaffray analyst Christopher Larsen told Reuters. In the first quarter of 2010, AT&T claims to have activated 2.7 million iPhones, and 891,000 of those were for new subscribers.
AT&T subsidizes the iPhones by paying part of their cost to Apple in order to lower the price for buyers to as low as $99, rather than the $599 price of the first iPhones in 2007. Overall, though, the company makes money from iPhone owners — first by charging them $18 to activate the phone in a store, then by billing them $70 or more per month — that’s $840-plus per year — for a long-term contract.
In response to complaints about weak iPhone coverage by AT&T customers, the company recently began selling home iPhone range boosters made by Cisco.
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