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Could the Next iPhone Spur a New Wave of Wireless Deals? – Barron’s

By July 17, 2017 No Comments

Could the Next iPhone Spur a New Wave of Wireless Deals? – Barron’s

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With the next iPhone release approaching — whether it’s September or October — wireless investors are trying to figure out who will benefit from the latest version of Apple’s device.

“Carriers view iPhone launches as opportunities to gain market share, which usually elevates competitive behavior,” Morgan Stanley analyst Simon Flannery wrote in a note to clients Friday. He points out that last year T-Mobile promised a “free” iPhone to those who traded in earlier models, prompting rivals to follow suit.

Though T-Mobile and Sprint reported strong pre-orders for the iPhone 7 and iPhone 7 back then, Flannery says there’s reason to believe the wireless carriers will take a different approach this year. T-Mobile, for one, might concentrate on “Un-Carrier” benefits more so than pricing. “We think the lesson T-Mobile learned is that when promotions are quickly replicated, the biggest beneficiary is usually Apple (or the handset manufacturer of the day),” he writes.

Still, Flannery concedes, carriers don’t like to get one-upped, so if one of them decides to get overly promotional, the rest may as well. This time around, Sprint could be the first mover. The company has tried some interesting tactics lately to attract customers from Verizon, AT&T, and T-Mobile, including offering a free year of unlimited service to those who switched carriers and brought along their phones.

Current levels of competition have had an impact on financial results in the wireless industry, as most of the carriers reported a trail-off in revenue growth last quarter. But consumers win as wireless providers duke it out: “Even Fed Chair Janet Yellen has taken notice, calling out wireless pricing deflation as a contributing factor” to weak inflation, Flannery writes.

Big Picture: An analyst notes that big wireless promotions around iPhone-launch season tend to benefit Apple the most. Still, the carriers may not be able to resist a fight.

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July 18, 2017 at 12:55AM