AT&T is sharing subscription fees with Apple
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Piper Jaffray analyst Gene Munster sure does know how to keep his name in the news, and that's by talking about Apple. His latest set of predictions come in the form of revenue sharing between AT&T and Apple for iPhone subscriptions. While it's pretty much assumed that Apple is making a pretty penny off of hardware sales of the iPhone and AT&T is just happy to see people switching, Munster believes that AT&T is actually sharing a cut of the iPhone's monthly subscription costs with Apple.
The base for Munster's belief comes from the "unique terms of iPhone sales and pricing," according to The Mac Observer. He admits that Piper Jaffray doesn't know the exact terms of the agreement (which could possibly mean that they don't really know many details at all, but we'll give them the benefit of the doubt on this one). That said, Munster estimates that AT&T is paying Apple (conservatively) $3 per month per iPhone subscriber, and $11 per month per every new iPhone subscriber.
Assuming that there are now at least 1 million iPhone users on AT&T and that they are all generating $3 per month to Apple (I'm ignoring switchers for my overly-simplistic calculation here), that means the iPhone is generating at least $3 million in subscription fees to Apple per month, or roughly $36 million a year. Plus or minus some for the increased fees paid out for switchers and those who cancel service. Sure, that's not going to pay for Steve Jobs' velvet-lined hot tubs and gold-plated jets, but that's a little bit of pocket change more than, well, nothing. Munster knows this too. He points out that the deal would only add about $0.02 to Apple's EPS for this year, but could grow significantly in the coming years to $0.15 in 2008 and $0.58 in 2009. If Munster's predictions are true, Apple truly is making out like a bandit and AT&T really is just coming along for the ride.
Source: Google.com
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