Verizon can't wait for LTE iPhone

Summary:Verizon sold 4.2 million iPhones in the fourth quarter compared to 2.2 million LTE devices. Until Apple has an LTE iPhone Verizon's migration to a more efficient 4G network will be restrained.

Think you can't wait for a 4G Apple iPhone? Verizon CFO Fran Shammo and other executives probably want one even more.

Verizon's conundrum: It wants to move people to its Long-Term Evolution 4G network because its more efficient than its 3G version in terms of costs. The problem: Verizon moved almost twice as many iPhones than LTE devices in the fourth quarter.

Speaking at a Citi investment conference on Wednesday Shammo said:

We sold more than 4.2 million iPhones in the quarter, which was by far our heaviest quarter to date, almost two times every previous quarter. In addition, we sold over 2.2 million 4G devices, so an extremely strong quarter from a volume perspective.

Those 4G devices include MiFis and dongles.

Also see: CNET: Verizon doubles iPhone sales over last quarter

The catch is that Verizon takes a 500 to 600 basis point margin hit due to the iPhone subsidies. Analysts on Thursday were busy cutting their earnings targets.

That margin pressure equation may change when iPhone launches an LTE iPhone sometime in 2012. Analysts expect the iPhone 5 to be the big revenue driver for Apple in the year ahead. LTE networks are simply more efficient, said Shammo.

With the LTE 4G network we are seeing a lot of products come to market. I think you're going to see a very robust road map coming into 2012 around a lot more smartphones and tablets, additional MiFi cards. So I think the products set around LTE is also one that will generate more revenue. But it also will help with the cost efficiency within Wireless, because every time we add a customer to LTE it is a much more efficient and cost effective network than the 3G network.

The efficiency of that network and the utilization of that and what we see coming in the future from a usage perspective will help us accrete ARPU (average revenue per user).

Topics: Smartphones, Banking, Enterprise Software, Hardware, iPhone, Mobility, Networking, Verizon, Wi-Fi

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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