Cowen: T-Mobile, Sprint positioned to benefit from launch of new iPhone

T-Mobile and Sprint are well positioned to take advantage of the new iPhone Apple is expected to announce tomorrow, analysts at Cowen and Company Equity Research wrote.

All four major U.S. carriers have overhauled their basic plans in recent weeks: T-Mobile and Sprint trotted out new unlimited plans targeted at families while Verizon and AT&T removed overage charges as they raised both the prices and the monthly data allotments in their plans.

The moves underscore increased competition during the third quarter following a relatively placid second quarter. And with smartphone growth slowing to a crawl in the U.S., operators are increasingly targeting data-hungry users with multiple lines.

“All four carriers have recently introduced new price plans in front of an iPhone 7 launch that focus on unlimited offers, doing away with overages, and/or more attractive high-end plans,” Cohen analysts wrote. “While the net effect still suggests price rationality (ARPU neutral/accretive), the net impact implies an increased level of competition for high-end/multi-line accounts. The dynamic seems to favor T-Mobile/Sprint meanwhile AT&T/Verizon have the most to lose as they defend share in this high-end cohort.”

Like many of its rivals, Apple has struggled with flagging sales in a slowing worldwide smartphone market, and the release earlier this year of the iPhone SE – which is a smaller, cheaper version of the iPhone 6S – saw only modest sales at launch. Apple has posted two consecutive quarters of falling iPhone sales so far this year, and its $42.4 billion in second-quarter revenue marked a 14.6 percent year-over-year decline.

The release of a new flagship handset provides a major opportunity for Apple to regain some lost ground, however. While the iPhone 7 reportedly won’t offer any earth-shattering new features, it is expected to be a compelling high-end device, particularly compared to the iPhone SE. And Samsung, which remains the world’s largest smartphone vendor, is scrambling to manage the worldwide recall of its new Galaxy Note 7 following reports of batteries exploding or catching fire.

Apple is also expected to unveil the second generation of its Apple Watch as it hopes to regain momentum in a wearables market that has yet to catch fire. Shipments of Apple’s smart watch fell nearly 57 percent in the second quarter of 2016 from the previous year, according to IDC, and its share of the wearables market shrank to 7 percent, down from 20.3 percent the previous year.

“Apple was the only vendor among the market leaders to post a year-over-year decrease in shipment volumes, primarily because it did not launch a new model on the anniversary of its first generation Watch,” IDC said. “2Q16 was the first full quarter of Apple's reduced price strategy on the Sport model, which slightly helped the company rebound from its post-holiday slump.”

For more:
- see this IDC press release

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