Verizon - AT&T spar over tie-up with Apple

30 April 2009

With both AT&T Inc and Verizon Wireless, the two top US mobile operators, keen to tie-up with apple for distribution arrangements for its popular iPhone, speculation about who will finally make it is rife in the industry. According to industry sources whether one or both operators finally sign up, Apple will be the final winner.

Apple and AT&T already have a deal going, which is believed to run till 2010 under which AT&T will carry the iPhone on its Global Service Mobile (GSM) network. According to analysts, Apple is believed to earn a profit margin of more than 50 per cent on the iPhone.

But they add that Lowell McAdam, the head of Verizon Wireless, recently had discussions with Apple's chief executive, Steve Jobs, and other senior Apple executives about carrying an iPhone on its network.

They say it makes as much sense for Verizon to tie-up with Apple, as for AT&T to ensure that a Verizon-Apple tie-up does not materialise. In such a scenario, they aver Apple is the clear winner.

With Verizon as a carrier Apple could more than double its current addressable market; AT&T has about 78.2 million wireless customers, while Verizon has 86.6 million according to the companies' recent quarterly reports.

But AT&T, with 1.6 million iPhone activations in the first quarter of this year is not expected to yield its iPhone exclusivity. It sells iPhone for as little as $199 after paying a huge subsidy to Apple to boost sales.