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Telecom operators hurt selling iPhones

Tue, 08/18/2009 - 5:28am
Tarmo Virki, European technology correspondent (Reuters)

HELSINKI (Reuters) - Heavy subsidies shelled out by telecom operators around the world to lure consumers to buy an Apple iPhone have done nothing to increase profits, and have even dented them in some cases, a research report showed on Monday.

"According to the research we have conducted on the operators, not one of these have increased their market share, revenue, or their earnings as a result of introducing the iPhone," Strand Consult says in the report.

"On the contrary, some operators have sent out profit warnings because of the iPhone," the Copenhagen-based wireless consultancy said in report scheduled to be published this week.

Cupertino, California-based Apple released its first iPhone in mid-2007, and it quickly became a consumer phenomenon thanks to its unique design and ease of use.

In its June quarter Apple sold 5.2 million iPhones. This compares to 268 million phones sold globally by all handset manufacturers.

But not everyone has profited.

"We have not found one operator which has created shareholder value with iPhone," Strand said. "When looking at the numbers we can't see the iPhone effect -- a lot of competitors are actually doing better."

AT&T Inc, iPhone's exclusive carrier in the United States, said in June its costs to sell the new version of the iPhone would be similar to those for the original 3G iPhone, which pressured its profits last year.

SingTel, Southeast Asia's largest phone firm, has reported falling profits due to iPhone launches, saying the iPhone alone hurt operating profit margin by 3-4 percentage points.

TeliaSonera, the top operator in the Nordics, has launched the iPhone with large marketing campaigns in all Nordic countries, but it has not helped it to boost market share or lift revenues per subscriber (ARPU) according to Strand's report.

TeliaSonera's ARPU in Denmark has declined from 212 Danish crowns to 168 crowns over last two years, twice the pace of ARPU fall of Sonofon whose ARPU in first quarter was 205 crowns. Its market share is unchanged from two years ago.

In Sweden TeliaSonera has lost one percentage point of market share in two years, and its the lowest ARPU carrier among top firms, with ARPU falling to 179 Swedish crowns in the first quarter.

Operators have heavily subsidized iPhones, hoping to reap benefits later, but as Apple moves away from exclusive deals operators are seeing their window of opportunity close, Strand says.

"Operators are definitely looking for alternatives to the iPhone that return more value back to the operator," said Frank Meehan, chief executive of INQ Mobile, a phone making arm of Hutchison.

Strand's report says other handset makers are starting to catch Apple, whose latest model is very similar to original 2007 iPhone, and noted several small operators have started to successfully court iPhone customers of other operators. (Reporting by Tarmo Virki; Editing by Rupert Winchester)

 

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