(Reuters) - The iPhone’s imminent arrival on Verizon Wireless will be a game changer for the U.S. telecom industry but may not necessarily spell earnings loss for rival AT&T (T.N) in the short run, Nomura Equity Research said, and initiated coverage on the sector with “neutral” rating.
Verizon Wireless has been rumored to be the second U.S. operator which will get Apple Inc’s (AAPL.O) iPhone as early as January next year.
“We believe the iPhone will arrive on Verizon’s shelf sometime early in 2011 ... Although we expect losses of at least 2.2 million subscribers to the Verizon iPhone ... AT&T could have a net positive impact on earnings due to the early termination fee revenue,” the brokerage, which has a “buy” rating on AT&T stock, said in a note dated December 13.
Nomura analysts started Verizon with a “neutral” rating, saying the company’s earnings could be hit in the first year of the iPhone deal depending on the nature of its contract with Apple.
The brokerage warned that with six-seven major players the wireless industry was overcrowded, which can have a degrading impact on margins and pricing.
Reporting by Himank Sharma in Bangalore; Editing by Joyjeet Das