Mobile service providers have good reasons for disliking subsidized smart phones, since the practice puts a real drag on operating results. For AT&T, the financial impact of iPhone subsidies is clear. AT&T profit margins had grown for five straight years beginning in 2005, but reversed in 2010, apparently related directly to iPhone 4 demand and subsidies, BTIG argues.
BTIG estimates that the iPhone subsidies reduced AT&T margins by at least 10 percent in 2011, for example. To be sure, there also are churn reduction effects, as customers sign two-year contracts to earn the subsidies. But the subsidy costs outweigh the value of the churn benefits.
Vodafone Spain and Telefonica tested the theory that consumers would respond favorably to unsubsidized device prices by ending all device subsidies early in 2012. Both carriers might now agree that device subsidies are required.
Vodafone's Spanish division is bringing back subsidized smart phones, apparently on a "permanent" basis, after losing more than half a million customers in the second quarter of 2012 while competitors Orange and Yoigo gained market share.
A temporary restoration of subsidies was announced by Vodafone in August 2012.
Vodafone Spain and rival Telefonica used Spain as a testing ground for getting rid of the costly subsidies for new customers and ended the policy in April and March respectively.
But both companies lost out to rivals Orange and Yoigo, with Vodafone losing 639,000 customers in the second-quarter, while Telefonica lost 830,000 customers between April and August of 2012.
Meanwhile Orange gained 80,240 customers and Yoigo 58,069 in the second quarter and other operators gained 238,578 customers between them.
Vodafone's Spanish division is bringing back subsidized smart phones, apparently on a "permanent" basis, after losing more than half a million customers in the second quarter of 2012 while competitors Orange and Yoigo gained market share.
A temporary restoration of subsidies was announced by Vodafone in August 2012.
Vodafone Spain and rival Telefonica used Spain as a testing ground for getting rid of the costly subsidies for new customers and ended the policy in April and March respectively.
But both companies lost out to rivals Orange and Yoigo, with Vodafone losing 639,000 customers in the second-quarter, while Telefonica lost 830,000 customers between April and August of 2012.
Meanwhile Orange gained 80,240 customers and Yoigo 58,069 in the second quarter and other operators gained 238,578 customers between them.
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