Did Apple Just Reveal a Huge Telecom Stock Divide?

Some telecom stocks appear to be profiting more than others when it comes to Apple's new iPhones.

According to research firm Localytics, AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) are activating a larger share of the meatier (and presumably more data-hungry) 5s. Sprint Nextel (NYSE: S  ) is selling the 5s and lower-cost 5c at about the same rate, while T-Mobile USA (NASDAQ: TMUS  ) is appealing to more cheapskates.

Three things to watch for next
Some of this is to be expected. T-Mobile appealed directly to price-sensitive customers when it ditched contracts. Month-to-month customers are always more likely to hunt for bargains.

By contrast, customers under contract are more likely to seek coverage, features, and fast data speeds. These are the super-users Verizon is banking on in its $130 billion buyout of Vodafone's share of Verizon Wireless.

So what should we look for in the next quarter's worth of results from these carriers? I'm watching three areas specifically:

  • Revenue per user at AT&T and Verizon. More functional phones tend to command fatter contracts and more bountiful data plans. Look for the 5s to help the two majors earn more from new customers.

  • Upgrades at Sprint. It's hard to know where Sprint benefits most from the new iPhones since there appears to be an even split between 5s and 5c activations. Are most of these customers upgraders? I'd guess "yes."

  • Zero-down activations at T-Mobile. There's nothing like the lure of $0 down to bring in customers, and T-Mobile is offering just that to 5c customers willing to settle for a 16GB iPhone 5c. I'm expecting such deals to account for the majority of the carrier's current-quarter Apple sales.

Now it's your turn to weigh in. Which telecom stock do you like most right now, and why? Leave a comment to let us know what you think.

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Comments from our Foolish Readers

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  • Report this Comment On September 28, 2013, at 6:34 PM, dino1818 wrote:

    With Sprint's unlimited data plan, the data-hungry 5s is tailor-made for it. Many users are worried about going over on their usage. It doesn't help that Verizon and AT&T plans are the most expensive in America.

  • Report this Comment On September 29, 2013, at 12:28 AM, SimchaStein wrote:

    News? T and VZ have always had the higher ARPU client base.

  • Report this Comment On September 29, 2013, at 3:20 AM, iknoerle wrote:

    You think the majority of T-mobile iphones will be the 5c because their customers are more price conscious?

    75%+ of iphone sold have been 5s even though the 5c was available 1st. Also, the 5s is the 1st "new" flagship iphone for T-mobile, so anyone that waits for new devices to come out on their carrier will have waited for the 5s since the 5 was mid-cycle when it became available on T-mobile. Bottom line, NO WAY!

  • Report this Comment On September 29, 2013, at 7:51 AM, exfoneman wrote:

    I like Sprint - it has the most bandwidth of all and the most improvement to make since its takeover of Clearwire and merger with Softbank. Its ranking will improve as its coverage gets better; they already have the best Customer Support in the business.

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