Verizon Wireless to spend up to $5B in subsidies on iPhone

Jan 11, 2011
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Today is the big day for the Verizon event out in NYC and Vince is there. This is the anticipated event where Verizon Wireless is expected to finally announce that it is getting the iPhone on its network after four years of users clamoring for the announcement. BusinessWeek reports that s source close to Verizon plans has confirmed that the iPhone is the agenda today.

The iPhone will reportedly go on sale later this month and one of the more interesting tidbits is that Verizon plans to spend big time on subsidies. Analysts told BusinessWeek that Verizon would spend as much as $3 billion to $5 billion this year on subsidizes alone for the iPhone.

The huge expenditure on subsidies for the iPhone will cut into profits though. Analyst John Hodulik from UBS AG said that the subsidy would be $400 per user and Verizon is estimated to sell about 13 million phones this year for a total of about $5.2 billion. He said, "You basically write customers a $400 check. We expect margins to be down pretty meaningfully in the first quarter and second quarter."


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