Cingular may give $300 per iPhone sale to Apple

Apple could see extra commissions from its iPhone partner AT&T/Cingular, if the company is able to attract "switchers" from other mobile networks. Following an upgrade of Apple stock this morning, Citigroup analyst Michael Rollins says that the exclusive US carrier deal with Apple could include payouts of up to $300 per new subscriber. The Cupertino-based company could receive between $250 and $300 for each new subscriber it helps lure to Cingular's network, according to AppleInsider. The payouts would likely come over the life of the service contracts and represent very high-margin revenue for Apple, the analyst wrote in a research report. Previous reports indicate that the iPhone may have 50 percent gross margins.

The deal would be similar to an arrangement already in place between Cingular and Radio Shack, where the electronics retailer earns roughly $300 for closing new service contracts.

It is not clear whether Apple will earn the traditional incentive on each new iPhone or only on those sold by Apple--via its online store and retail outlets. Cingular's mobile phone stores will be the exclusive third-party retailer of the iPhone in the US.

Though the analyst noted that the details of Cingular/AT&T deal with Apple have not been revealed, such new subscriber incentives are already in place with other cell phone resellers such as Amazon.com. Rollins said the world's largest carrier, which in the midst of a transition from the Cingular brand to AT&T, is hoping to use the additional incentives to help offset slow subscriber growth over the next few years, according to the report.

With an expected slow down in new subscribers and a decline in voice minute revenue, the carriers are looking to sell extra services to existing customers, including high-speed data plans for internet access, entertainment services such as mobile television, and music playback services. The report indicates that the base iPhone price may also include subscription to an internet data plan during the initial required two-year contract term.

Filed under: Apple