Verizon will reportedly spend $5 billion in subsidies for the iPhone during first year

Sections: Cellular Providers, Communications, Mobile, Smartphones

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While all signs are currently pointing to Verizon announcing the iPhone later this morning, we have word coming from a recent Bloomberg report which states that this announcement could cost Verizon big time. According to the details given, Verizon could potentially spend anywhere from as low as $3 and up to $5 billion to subsidize the iPhone this year. And of course, that $3 to $5 billion would likely eat into what would otherwise be profit.

While the smartphone will help Verizon add more subscribers this year than rival AT&T Inc., currently the exclusive U.S. carrier for the iPhone, it will also crimp profits, said John Hodulik, an analyst at UBS AG. Hodulik said Verizon may sell 13 million of the devices with an estimated $400 subsidy this year, which would add up to a total of $5.2 billion.

Read [Bloomberg]

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