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Verizon iPhone deal could lose up to $14 billion in 2013

updated 12:10 pm EDT, Thu July 11, 2013

Apple, Verizon may choose to renegotiate

Verizon could lose between $12 billion and $14 billion this year based on its iPhone deal with Apple, claims telecoms analyst Craig Moffett. The carrier signed the deal in 2010, and is reportedly obligated to buy $23.5 billion in iPhones during 2013. That's twice the value of the iPhones Verizon sold in 2012, Moffett says, leading to the predicted shortfall.

Apple regularly makes prospective iPhone carriers agree to minimum unit purchases. While some carriers will refuse, knowing the potential pitfalls, others may feel they have no choice but to agree given the iPhone's popularity. Sprint and T-Mobile, for instance, both saw steady erosion of their subscriber numbers until they signed iPhone deals.

Moffett suggests however that Apple is unlikely to make Verizon pay the full amount on any shortfall. Instead he argues that Apple will likely demand concessions if the two parties agree to renegotiate.




by MacNN Staff

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  1. jdsonice@gmail.com

    Fresh-Faced Recruit

    Joined: 10-18-09

    Verizon sucks as a company so it is no wonder that they are having problems. I would go with T-Mobile.

  1. AppleTechSpot

    Fresh-Faced Recruit

    Joined: 06-27-13

    Well if Verizon and other telcos wouldn't allow spiffs to be paid to salesman to push Android phones then perhaps they wouldn't be upside down selling iPhones. Perhaps they are a victim of their own bad sales policies.

  1. sgs123

    Fresh-Faced Recruit

    Joined: 12-24-05

    Don'f forget that Apple has to produce a custom version of the iPhone and iPad for Verizon's non-standard CDMA network -- that alone is good reason for a minimum purchase requirement. The agreement also provides financial incentive for Verizon to start pushing the iPhone.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    Let's see how Verizon does with a) the next iPhone model and b) the holiday buying season before we jump to conclusions about shortages. My guess is that they may still end up owing Apple a sum of money but I doubt it will be $14B.

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