Apple Inc. (AAPL): Will T-Mobile’s iPhone 5 Deal Change the Wireless Industry?

Still, we think the wireless industry will be watching closely to see if becoming creditors works to boost smartphone sales. Sprint, which also positions itself as a value brand, could easily alter its iPhone pricing to $9 per month over a two year contract with zero money upfront and recoup more of the hardware cost. Although this model could hurt margins if more consumers opt for iPhones, we think it could also prompt less churn and goad consumers into higher margin plans, the thought being that lower upfront costs could translate to higher monthly costs. AT&T and Verizon might choose to lower upfront hardware costs in exchange for monthly payments if T-Mobile’s strategy proves to be incredibly successful, but we doubt it happens in the near-term. However, as we said earlier, we do not believe the major carriers will get rid of the contract business model.

Overall, we see little to prompt change at AT&T or Verizon, but we think Sprint is the most likely to copy the hardware pricing model. Getting rid of contracts may be positive for consumers, but we think the wireless industry has little interest in getting rid of such a successful business model. T-Mobile’s new strategy could help boost iPhone sales, but we think the company is putting itself in a difficult position eliminating contracts. A strong competitive position, high ARPA (average revenue per account) customers, and a strong dividend growth profile make Verizon our favorite name in the wireless carrier space.

The article Will T-Mobile’s iPhone 5 Deal Change the Wireless Industry? originally appeared on Fool.com and is written by RJ Towner.

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