IPhone 6 Is Turning Out To Be A Huge Boost To T-Mobile --  And A Threat To AT&T

An iPhone 6 phone is seen on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York September 19, 2014. REUTERS/Adrees LatifThomson ReutersAn iPhone 6 phone is seen on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York

WASHINGTON – Apple’s iPhone 6 only went on sale in the last two weeks of the quarter, but the device’s rollout may have been the U.S. cellular industry’s top growth catalyst in the period, with T-Mobile US benefiting the most.

Since the larger, slimmer iPhone was unveiled on Sept. 9, the U.S. cellular market has been flooded with deals for subscribers looking to switch providers ahead of earnings reports starting next week.

Helped by T-Mobile’s claim that it was offering the best repurchase terms on old iPhones, the No. 4 carrier grew faster than any of its competitors in the quarter, with revenue seen rising 11 per cent to $US7.4 billion.

“The iPhone cycle is going to favour the smaller operators, particularly T-mobile, which poses the biggest challenge for AT&T because it has the largest iPhone base,” said Craig Moffett, analyst at MoffettNathanson in New York.

T-Mobile turned around years of losses last year when it eliminated customer contracts and pulled the industry into a price war.

In August, traditionally a slow month for the carriers, the company drew a record number of subscribers.

Analysts expect T-Mobile to have brought in 950,000 valuable postpaid subscribers, customers who do not pay for service up front according to Wall Street analyst estimates.

Verizon Communications is expected to remain the No. 1 carrier, with 1 million new postpaid subscribers, analysts said, but is experiencing slower growth.

A growing portion of customers who once paid for service up front are migrating to postpaid service, which typically includes higher data allowances but also costs more.

Meanwhile, analysts expect Sprint Corp to lose 177,000 postpaid subscribers in the quarter as it finalises a network overhaul that has caused gaps in its coverage.

Sprint’s new chief executive, Marcelo Claure, has been trying to revive the company with promotions and price cuts, but the deals have yet to boost customer numbers.

“They have not been as aggressive as you might think for a company in such a tight spot,” said Mark Stodden, an analyst at Moody’s Investors Service. He expects Sprint to become more competitive in coming quarters as the promotions draw in more customers.

The quarter also marks the first iPhone launch after carriers last year began to steer away from two-year subscriber contracts that bundled in the cost of a phone and toward charging customers separately for services and devices.

Most carriers required customers joining the new, unbundled plans to purchase new devices.

But for some 17 million AT&T Inc customers who were able to get cheaper service plans without purchasing a new handset, a new iPhone will mean a price bump on their monthly bills, which could shock customers into looking for less costly options, Moffett said.

Still, the equipment instalment plans mean iPhone purchases will give carriers a temporary boost to earnings, as the companies no longer subsidise devices.

“Ironically, in the past, big device launches depressed earnings, but now they will be inflated,” said Stodden.

(Reporting by Marina Lopes; Editing by Jonathan Oatis)

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This article originally appeared at Reuters. Copyright 2014. Follow Reuters on Twitter.

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