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AT&T’s (T) stock depends on the iPhone (AAPL) and how future smartphone data revenues trend. We estimate that AT&T’s mobile phones and wireless plans (including data) constitute about 43% of AT&T’s stock value and that about 25% of AT&T’s mobile revenues are attributable to the iPhone.

In comparison, about 42% of Verizon’s (VZ) stock is from the company’s mobile business and 37% of Sprint’s (S) stock depends on mobile data (internet, text) alone.

Competing US mobile providers like Verizon and Sprint are looking to offer the iPhone to their subscribers and the consequences of iPhone competition can be meaningful for AT&T’s wireless data revenues.

iPhone exclusivity has helped AT&T consistently gain wireless market share in recent years. The company’s wireless business had revenues of about $54 billion in 2009 and we estimate that 13 million iPhone subscribers spending $90 – $95 per month account for about 25% of current wireless revenues.

15% of AT&T Subscribers Have an iPhone

2009 was a successful year for AT&T both in terms of iPhone activations and overall wireless subscriber additions. AT&T added about 8 million net wireless subscribers in 2009, a growth of more than 10% over the prior year. The company activated more than 6 million new iPhones during the second half of 2009 alone.

We estimate that AT&T currently has about 13 million iPhone subscribers which account for approximately 15% of AT&T’s wireless subscriber base.

Average iPhone Customer Pays $90 – $95 Per Month to AT&T

We estimate that AT&T’s average revenue per user (ARPU) for the iPhone is $90 – $95 per month which includes the mandatory $30 per month data plan. iPhone monthly service plans currently range from $70 per month for data and 450 monthly minutes (no text messages included), to over $120 per month for data, unlimited voice, unlimited text and other incremental features (GPS, VoiceDial, parental controls).

AT&T’s average revenue per user (ARPU) for the iPhone is about twice its ARPU for regular feature phones. Based on our iPhone subscriber and monthly spend estimates, AT&T earns more than $1 billion per month from iPhone revenues.

High ARPU (average monthly revenue per subscriber) for the iPhone can be attributed to high amount of data usage driven by variety of applications available for iPhone’s operating system. Increasing penetration of smartphones is expected to drive ARPU up slightly in future. Below you can see how a faster growth in wireless data ARPU can impact AT&T’s stock price.

AT&T Earns Back iPhone Subsidy in 5 Months

Although iPhones contribute significantly to AT&T’s revenue, they are also sold to subscribers at highly discounted prices. AT&T subsidizes about $400 of the iPhone purchase price. Within an iPhone ARPU of around $90 – $95, it takes AT&T about 5 months on average to earn back the subsidy cost.

Importance of iPhone ARPUs for AT&T’s Stock

We forecast that the voice component of overall AT&T mobile ARPU will continue to decline; however, such declines will be offset in part by increases in the overall AT&T data ARPU (see chart above).

By modifying our data ARPU forecast, you can see how AT&T’s stock would be impacted if future ARPU growth were slower than we forecast as a result of the availability of the iPhone on competing networks (Verizon, Sprint, T-Mobile (DT)).

For additional analysis and forecasts, here is our complete model for AT&T’s stock.

Disclosure: No positions

Source: AT&T: iPhone Makes Up 25% of Mobile Revenue