AT&T Paying Apple $325 iPhone Subsidy

Analysts have reported that AT&T will be paying a subsidy of $325 for each 3G iPhone it sells. This is a large cost for AT&T since they typically pay a subsidy of $200 for any other phone activated on its network.

According to Oppenheimer Analyst Yair Reiner, AT&T will be paying Apple $524 for 8 GB and $624 for 16 GB, then charging the customer only $199 and $299 respectively. AT&T will also pay Apple a $100 commission for each phone sold in Apple’s stores, thus increasing the payment to $425.

The reason why AT&T is willing to pay the higher price? Reiner says that the higher subsidies for the iPhones “reflects AT&T’s faith in the iPhone’s ability to attract new subs and increase ARPU (Average Revenue per User).”

iPhone 3G 199

No word yet on if other iPhone carriers around the globe will be paying the same subsidies, but it is assumed it will at least be very close to that same price for everyone, as most companies are selling the iPhone for nearly the same price as AT&T (exception for O2 and TM selling theirs for free).

via Tech Trader Daily


Author: Brad Molen

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