Verizon Wireless, the largest U.S. mobile carrier, sold 4.2 million Apple Inc. (AAPL) iPhones in the fourth quarter, more than doubling from the third quarter, said Fran Shammo, finance chief of the company’s parent.
The iPhone sales will narrow gross margins at the wireless business by 500 to 600 basis points, Shammo, chief financial officer of Verizon Communications Inc. (VZ), said today at a Citigroup Inc. event in San Francisco. U.S. carriers sell smartphones such as the iPhone to subscribers at a loss to get them to sign up for contracts that typically run for two years.
The demand suggests Verizon Wireless is winning an increasing share of new iPhone users, after gaining rights to offer the handset to its subscribers last year. In the third quarter, Verizon added 2 million customers for the device, trailing the 2.7 million iPhone activations at AT&T Inc. (T), which has offered the handset since 2007.
Even with lower iPhone activations, Verizon Wireless has outpaced AT&T in total subscriber gains, helped by demand for handsets that run on Google Inc.’s Android operating system. Verizon Wireless, jointly owned by New York-based Verizon Communications and Vodafone Group Plc (VOD), added 882,000 contract, or postpaid, subscribers in the third quarter, compared with 319,000 at Dallas-based AT&T.
Verizon shares (VZ) fell 1.3 percent to $39.21 at the close in New York. The stock advanced 12 percent last year, compared with a 2.9 percent gain by AT&T. AT&T added 0.2 percent to $30.43 today and Cupertino, California-based Apple rose 0.5 percent to $413.44.
To contact the reporter on this story: Scott Moritz at firstname.lastname@example.org
To contact the editor responsible for this story: Peter Elstrom at email@example.com