Sometimes a win for a supplier is not always a win for a carrier in the world of telecommunications. UBS has a mixed research report that is upping Apple Inc. (NASDAQ: AAPL) in iPhone sales targets but is lowering estimates for AT&T Inc. (NYSE: T). The rumors are persistent that Apple will be selling the iPhone through Verizon Communications Inc. (NYSE: VZ), and this is something that Verizon will need to play attention to.
UBS expects that AT&T will activate 4.5 million phones this quarter. The earlier estimates was for 2.5 million iPhones. UBS noted that this will likely push AT&T’s post-paid total subscriber adds to about 800,000 from a prior target of about 700,000.
This is obviously good for Apple. Unfortunately, it may be worse than a zero-sum game for AT&T. UBS believes that AT&T should face tighter margins in its wireless unit because of a switch to a newer pricing package on tiered data plans. As a result, UBS cut $0.05 from EPS estimates to $0.55. This is not even without as much network capacity expansion that AT&T still needs to conduct with its cellphone tower rental.
As the market is soft, Apple is down and there is no boost for Apple shares: AT&T is down 0.6% at $27.27 and Apple is down only 0.3% at $257.91.
Verizon is actually up by $0.02 at $30.22 this morning. Maybe the company should consider not even fighting AT&T on price after all the network comparison issues that were a part of the AT&T and Verizon network coverage plan earlier this year.
JON C. OGG