AT&T (T - Get Report) has had an exclusive agreement with Apple to distribute the iPhone in the U.S. since the launch of the phone in 2007. We estimate that the iPhone accounts for more than 50% of the value of Apple's stock and that a Verizon deal could have a meaningful impact on the company's stock.
A deal with Verizon could lead to an increase in our expected Apple mobile phone market share if iPhone sales through Verizon can match expected sales through AT&T with minimal cannibalization of AT&T sales. We currently expect Apple to have 4.4% market share globally in 2011 -- this could increase to about 5.9% in a best case scenario as a result of the iPhone selling at Verizon. Such an increase would result in a 10% upside to our $267 Trefis price estimate for Apple's stock.Below we explain how Verizon could help Apple increase iPhone's market share to about 5.9% by 2011. Apple Could Sell 18 million iPhones Through AT&T in 2011 We currently estimate that Apple will sell about 60 million iPhones globally in 2011, implying 4.4% share within the global mobile phone market. We estimate that Apple will have about 30% share within the U.S. smartphone market during that same period. We also estimate that a total of 60 million smartphones will be sold in the U.S. in 2011 and that Apple will sell about 18 million iPhones through AT&T in 2011. Apple Could Sell an Additional 20 million iPhones Via Verizon in 2011 We estimate that Verizon will have about 98 million subscribers (33% of U.S. marketshare) in 2011 compared to about 92 million AT&T subscribers (31% U.S. marketshare). Based on AT&T's ratio of iPhone sales to total subscribers, we estimate that Verizon, in a best case scenario, would be able to sell as many as 20 million iPhones in 2011. If sales of iPhones on Verizon have minimal cannibalization of AT&T iPhone sales, then Apple's global mobile phone market share could increase to 5.9% rather than the expected 4.4% in 2011.