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Analyst: iPhone 5 Launch for Rogers, Telus and Bell Not Expected to Drive Growth

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Even though the iPhone 5 was met with incredible fanfare at our ‘Big 3’ wireless carriers, one analysts believes the new phone will not drive growth in the short term. This is due to the massive subsidies Rogers, Telus and Bell have to pay out for customers upgrading or renewing contracts to the new iPhone.

A brand new 16GB iPhone 5 retails for $699, whereas carriers charge the subsidized price of $179, which is locked to a three year contract. It is the income received over these three years where carriers benefit.

Maher Yaghi of Desjardins Securities Inc. says benefits from iPhone launches will continue to shrink, even though customers continue to sign onto voice and data plans, reports the Globe and Mail:

Because some people are upgrading from smartphones to other smartphones, the carriers may have to pay out various retention costs without even seeing a boost in the average revenue per user, or ARPU, that comes with a subscriber upgrading from a simple text-and-talk cellphone to smartphone that also has a data plan.

Mr. Yaghi notes that with the launch of the iPhone 4s in October of 2011, Rogers saw its lowest quarterly profit margins in 5 years, as the company paid out for equipment costs, smartphone activations and smartphone upgrades.

“We believe the marginal ARPU lift from the launch of the iPhone 5 will be lower than what we have seen historically given the changing demographics of the wireless providers’ subscriber bases,” Mr. Yaghi wrote in his research note. “As a result, we do [not] expect the launch of the iPhone 5 to drive an acceleration in the rate of ARPU growth in 2013.”

Even with these subsidies, many customers have also opted to buy factory unlocked devices from Apple. This year, Apple went to an online-only ordering system for unlocked versions of the iPhone 5.

Still though, with these expensive subsidies, carriers have seen smartphone activations proliferate along with increased adoption of data plans. The iPhone remains the most popular cellphone on Rogers, Telus and Bell, according to comScore.

Rogers Sees the iPhone Launch as a “Wonderful Thing”

Edward Rogers, deputy chairman and executive vice-president of emerging business and corporate development at Rogers had this to say last week about the iPhone 5, at a recent CIBC investor conference in Montreal:

“I’m amazed when you see the iPhone 5 launch and people line up for a day or two days outside of a store, I think it is a wonderful thing. We wish they would do that for our next-generation of cable boxes,”“I think we should try that and see if anyone shows up.”

Now that would be interesting. Lining up for Rogers PVRs.

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  • Awww I feel so sorry for them …. NOT.

  • ohhh poor carriers … still able to lock us down for 3y by the way …

  • Fastrace24

    I’d gladly pay more for my phone if my monthly bill would be cheaper. There’s a gap between the usefulness of “pay as you go” and the full voice+data plans offered by most carriers. Everyone needs to make money, but I can’t believe the disparity between what we pay and what our American neighbours pay. I’ve spent a great deal of time south of the border and learned that what I pay for 1GB, and 200 minutes (plus a few extras) in Canada, could pay for unlimited everything in the USA. It’s hard to have sympathy for the carriers at times, especially when you add a 3-year contract to all of this and a higher price for the same phone.

  • Spike

    I’d line up for an Apple PVR (and light my current box on fire to stay warm while I’m waiting).

  • Yep. Rumor has it that Apple is working on such a thing. I hope it turns out to be true.

  • gerry

    The carriers are really the one’s who’s eating our money.

  • IKnow

    After paying $160 2 years ago to upgrade my 3G to iphone4 I am extremely pissed that I must now pay an additional $143 on top of the $199 to upgrade to the iPhone5. I hate all Canadian phone companies. What a bunch of Nazis. FUCK YOU ALL
    ROGERS BELL TELUS FIDO KOODO (Bitches)

  • Cordova Bay

    Dont believe a word of it. I have an unlocked iPhone 5 that the carriers havent paid a nickel for with monthly billings in excess of $200 but none of those carriers carry a nano sim for me to use. If they don’t want “found” money then they must be making enough from the subsidized phones to ignore these opportunities.

  • agreed. I’m in the same boat but with rogers… PLUS, I haven’t gotten phone calls for the last 6 months in Winnipeg due to LTE testing effecting their 3g network – I get a notification saying I have a voicemail but it never rings and they won’t upgrade me to the newer network. They told me straight up that it wasn’t in their best interests to upgrade me to see if the issue with being in their new network would be resolved by switching to their new network. Even if I re-up and sign a new contract. They don’t care about their customers – why should we care about their growth.

    I’ll skip on the nazi talk, though…

  • hope so

  • the power of monopoly lives..its has somthing to do with coverage area I was advised as i use that word loosely

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