Analysts: T-Mobile may reap benefits of cheaper iPhone

T-Mobile US (NYSE:TMUS) could benefit more than other U.S. carriers if it launches the cheaper version of the iPhone that Apple (NASDAQ:AAPL) is widely expected to announce at a media event Tuesday at its headquarters in Cupertino, Calif., alongside a new high-end model, analysts said.

In part that's because T-Mobile only first started offering the iPhone in April and there remains a significant pent-up demand in its subscriber base for Apple's smartphones. Additionally, this will be the first time that all four Tier 1 carriers will likely launch a new iPhone at the same time, which could benefit T-Mobile, which offers cheaper rate plans than its larger competitors.

"It's a much more even playing field than it was last year, when AT&T had more of an advantage," Recon Analytics analyst (and FierceWireless contributor) Roger Entner told Bloomberg. T-Mobile is "in the right place at the right time with the right product."

Apple is expected to introduce a lower-cost iPhone model with colorful plastic casings and cheaper components, dubbed the iPhone 5C, in addition to a new flagship model, which is expected to be called the iPhone 5S. It's unclear how much Apple will sell the iPhone 5C for or if the product will only be sold only on a no-contract basis. According to AllThingsD, the cheaper model is expected to retail somewhere between $400 and $500 since that range appears to be a "sweet spot" for the Chinese market, where Apple hopes to expand its market share.

Tero Kuittinen, the head of sales and marketing for Alekstra Oy, which helps businesses manage telecommunication costs, told Bloomberg "the cheaper iPhone might fit T-Mobile's budget plan like a glove." T-Mobile's service plans are less expensive than those from Sprint, AT&T Mobility and Verizon Wireless because T-Mobile's no-contract service plans do not include the cost of a phone. Instead, users can purchase their phones outright for the full cost of the device, or can pay them off in monthly installments, after a downpayment. 

T-Mobile said 21 percent of the carrier's 4.3 million smartphone sales in the second quarter, or 903,000, were iPhones. T-Mobile reported on May 8 that it had sold 500,000 iPhones since it started selling the device April 12.

While Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) have proven adept at holding onto iPhone customers thanks to contracts, family plans and the depth of their LTE networks, they could face pressure from T-Mobile and Sprint (NYSE:S), especially from their prepaid brands, depending upon how Apple positions the cheaper iPhone model.

AT&T Mobility CEO Ralph de la Vega noted in July that the carrier has experienced an uptick in customer defections whenever a competitor starts selling the iPhone for the first time, but that the effect is always short-lived.

For Apple, while the U.S. will remain a major market, the company appears to be focusing on Asia for growth. Both Bloomberg and the Wall Street Journal reported that, according to unnamed sources, Apple will strike a deal with China Mobile to sell the cheaper model of its iPhone. Apple also reportedly has an iPhone deal with Japan's NTT DoCoMo. Greater China is Apple's third biggest market after the U.S. and Europe in terms of sales, the Journal noted. Such deals would open the iPhone up to as many as 800 million new potential customers.

For more:
- see this Bloomberg article
- see this AllThingsD article
- see this separate Bloomberg article
- see this WSJ article (sub. req.)
- see this NYT article

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