T-Mobile Rumor and Earnings Call Chatter

Over the last several quarters, analysts have been trying every way possible to get Peter Oppenheimer or Tim Cook provide any kind of guidance on the possibility of the iPhone being extended to other carriers in the US.

Here’s the most recent exchange and none answer from Apple courtesy of MacWorld’s coverage of the Earnings Call (minor editing for sake of clarity)

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Q: iPhone revenue units in Asia, Europe, and Japan. Why not North America? Law of large numbers? Anything to reaccelrate growth in domestic market?

Cook: Not law of large numbers. Phone market will increasingly come a smartphone market, as Steve said long ago. We’ve seen that that forecast has come true as the smartphone market has grown at multiples of basic handset market, which is shrinking. Lot of opportunity domestically and in other parts of America. Peter’s comment was more that our growth as a company, whether you look at Mac, iPhone,iPod, we’re growing faster internationally than domestically. Can see that in revenues as well. Revenues in America are growing over 40 percent, though.

Cook: It’s just that the international numbers are absolutely killer.

Q: On the global basis, lot of the growth has come from broadening growth, new carriers and countries. Opportunity to broaden markets you’re already in? India and China? Prepaid markets?

Cook: Both on the Mac and the iPhone and later the iPad as we roll it out to more places, still extraordinary opportunity left. Look at the Mac as an example.

Cook: In Asia Pacific, Macs grew 73% year over year. This is phenomenal that we could grow this month. In China, we grew 144%, in Korea, 184%, in Hong Kong we almost doubled. Even in Spain, with difficult economy, Mac grew 59%.

Cook: Very extraordinary numbers. In iPhone space, we are doing well in all of the key markets, and so in terms of expanding that, learning what we’ve learned with the exclusive deals, and continuing to look market by market, we’ve elected to open Spain up, will go from exclusive carrier market to having 3 carriers. That’s one example.

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Now that’s as much as you ever going to get from Cook that expansion in the US might be coming. Apple’s iPhone numbers in Europe and Asia are outpacing growth and numbers in the US (this is in even during a quarter where 80 of the days the iPhone 4 is not on sale, and most of the world knows a new iPhone is coming in June, and in European markets where feature rich data phones have been selling for years). Cook even specifically mentions the opening up of Spain to 3 carriers from one exclusive carrier because Apple throughout most of Europe is on multiple carriers already.

One day after the Earnings call, there’s a resurfacing of a very interesting rumor, iPhone to T-Mobile in the US in Q3. Cult of Mac is saying that there’s an 80% chance that T-Mobile will get the iPhone sometime in Q3. I don’t know why Cult of Mac felt it necessary to give a percentage for the rumor, but apparently their sources are reasonably confident about it. Cult of Mac’s rumor history isn’t terrible, but they are not a usual rumor source either so it’s hard to quantify what level of strength to put in this rumor. The byline is from Leander Kahney who is no stranger to watching all things Apple. (Kahney also said last week that a recall for the iPhone 4 would happen, so his record is hit or miss)

However, there are several reasons why this rumor could be reality, and why T-Mobile gets the iPhone before Verizon.

1. T-Mobile uses a UTMS/GSM network which is similar to the UTMS/GSM networks used by current iPhones with AT&T. Now it’s using a different frequency than AT&T , but from an engineering standpoint that transition would figure to be easier than a whole new radio chip set that will be required for the CDMA Verizon/Sprint iPhone 4. Support for the 1700/2100 Mhz Frequency (AT&T uses 850 and 1900 Mhz frequencies) might even be possible by a firmware/software change to existing inventory, meaning no separate inventory processes needed by Apple at all. Again, very appealing from a cost/cost to support standpoint, and Apple in theory could launch T-Mobile very quickly.

2. Apple already sells the iPhone throughout Europe via T-Mobile parent company Deutsche Telekom . In fact, DT is probably one of Apple’s biggest partners after AT&T. So there’s already an existing business relationship at the CEO type level.

3. T-Mobile in the USA is under a lot of pressure from both AT&T and Verizon. Getting the iPhone would seriously enchance T-Mobile’s ability to retain existing customers and attract new customers. This pressure could make T-Mobile willing to agree to Apple terms for deploying the iPhone.

4. Related to reason 3. T-Mobile has a lot of money invested in a high speed 3g HSPA+ network (up to 21 Mbps) and really needs to start adding a large number of data plan customers to pay off that network. With AT&T changing their data plans, there’s a window open for T-Mobile to offer better value to new iPhone customers.

Why does it make sense for Apple?

1. T-Mobile has a base of 34 million customers that can be mined as new iPhone customers. If the current iPhone can be modified with little impact, then increasing the footprint by about 30% (AT&T has about 85 million subscribers) is a win/win for Apple. If T-Mobile followed AT&T’s trend (20% of subscriber base is iPhone users), then Apple could be looking at 6 to 7 million additional iPhones sold in the first 12 months of availability (a potential $4 billion in revenue).

2. Adding T-Mobile might create additional pressure on Verizon to agree to Apple’s terms for deploying the iPhone. Verizon needs the iPhone, and Apple needs to extend the iPhone to Verizon’s network/90 million customer base. Neither company is probably willing to move much in negotiations.

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