Optical/IP Networks

AT&T’s iPhone Pain

11:55 AM -- AT&T Inc. (NYSE: T) said it would take an earnings hit of between $0.10 to $0.12 per share over the next two years as a result of heavy subsidies for the 3G iPhone, which it will sell for $199 and $299 for the 8GB and 16GB versions, respectively. It expects the iPhone to add to earnings from 2010 as subscriber numbers grow and customers migrate to higher priced service plans. (See iPhone II: Touching 3G .)

AT&T’s new agreement with Apple Inc. (Nasdaq: AAPL) ditches the original revenue share deal, where Apple got a cut of iPhone service revenues. AT&T now pays more for the device upfront, but it no longer has to share revenues with Apple.

AT&T has two monthly data plans for the iPhone: $30 per month for unlimited data and email for consumers and $45 per month for unlimited data and corporate email for enterprise users. The minimum voice plan required for the iPhone is $39.99 per month, and iPhone contracts are for two years.

— Michelle Donegan, European Editor, Unstrung

Sign In