If there was a frenemy to carrier profits, it could be Apple's iPhone. While iPhone users were rejoicing over the iPhone 5, U.S. wireless providers could pay $10 billion in subsidies to sell the new smartphone, according to one analyst. Indeed, AT&T and Verizon were downgraded just days after the new iPhone was announced.
The iPhone's success is a double-edged sword for US carriers. Although a new Apple phone can draw new subscribers like a magnet, the Cupertino, Calif. company is aware of its power, costing carriers $425 per handset in subsidies. Couple that high cost with the early sale of the device and carrier margins for the last half of 2012 will be slimmer than the iPhone 5, writes Stifel Nicolaus analyst Christopher King. King told investors AT&T and Verizon could be over-valued and downgraded both companies to 'hold.'