AT&T to offer breakthrough iPhone 3G
TO: All Employees
AT&T today announced that we will be the exclusive U.S. provider of the iPhone 3G set to debut Friday, July 11 in 8GB and 16GB models. Both will be available at AT&T stores and kiosks, and through our business sales teams. The new iPhone 3G will include:
* 3G broadband wireless, which gives customers a home broadband-like speed experience
* Business-class capabilities, including e-mail
* The ability for developers, including AT&T, to create customized consumer and business applications
* A new in-store activation process that should take just a few minutes
"The iPhone 3G will take mobile communications and computing to a whole new level by combining a terrific user interface with a great experience accessing the Internet and subscribers' favorite applications on our 3G wireless network at unsurpassed speeds," said Ralph de la Vega, president and chief executive officer of AT&T Mobility. "Combine our high-performance 3G broadband wireless network, the new iPhone's business-class capabilities and a starting price point of $199, and I expect we will continue to increase revenue per user, and attract customers who spend the most on wireless. The device is built, and priced, to sell."
The new iPhone harnesses the power of our 3G mobile broadband network, which offers download speeds of up to 1.4 Mbps, and is available today in 280 U.S. metro areas; by year-end, we plan to be in nearly 350 metro areas.
It will come with new business capabilities, including access to corporate e-mail and intranets. In addition, we have a catalog of hundreds of enterprise applications, and will work with Apple to enable many of these to work on iPhone 3G.
Our new agreement with Apple, which is consistent with traditional equipment manufacturer-carrier arrangements, eliminates revenue sharing, and we anticipate our new offers will drive increased sales volumes and revenues among data-centric customers. Our average monthly revenues per iPhone subscriber are nearly double the average of our subscriber base.
In the near term, we anticipate the new agreement will likely result in some pressure on margins and earnings, reflecting the costs of subsidized device pricing, which, in turn, is expected to drive increased subscriber volumes. We anticipate potential dilution to earnings per share from this initiative in the $0.10 to $0.12 range this year and next, with a 2008 adjusted consolidated operating income margin of approximately 24 percent and a full-year 2008 wireless OIBDA margin in the 39 to 40 percent range. As recurring revenue streams build without any further revenue sharing required, we expect the initiative to turn earnings-positive in 2010.
We also are working closely with Apple to roll out several new applications that take advantage of iPhone's advanced capabilities. We are finalizing a GPS-enabled application, our own YELLOWPAGES.COM mobile for the iPhone, which combines local search with social networking capabilities. In addition, we will work to certify many existing mobile applications for businesses, created in conjunction with third-party developers, for use on iPhone.
AT A GLANCE
With a two-year contract, the price of an 8GB iPhone 3G will be $199; the 16GB model will be priced at $299
Unlimited iPhone 3G data plans for consumers will be available for $30 a month, in addition to voice plans starting at $39.99 a month
Unlimited iPhone 3G data plans for business users will be available for $45 a month, in addition to a voice plan