Updated to include UBS analyst comments

NEW YORK ( TheStreet) -- In the daily speculation on everything Apple ( AAPL - Get Report), investors may be missing what could be the biggest story to emerge about the iPhone 5 after its September release.

Apple's newest iPhone and a lineup of tablet computers will provide a fourth-quarter test to the sustainability of profit margins for telecom giants Verizon ( VZ - Get Report), AT&T ( T - Get Report) and Sprint ( S - Get Report).

A recent Wall Street Journal report indicates that Apple may be cutting orders with suppliers who build the iPhone 5, potentially indicating less-than-anticipated demand for the company's newest smarthphone. The report, which cites anonymous sources, adds to a frenetic 2013 in the Apple rumor mill.

Previous media reports indicated Apple might start selling iPhones as low as $99 by year-end. However, Phil Schiller, Apple's head of marketing, quickly nixed such speculation.

Apple, at its 11 price-to-trailing-earnings multiple, seems to attract an ever-growing number of bulls who see America's most profitable company as an obvious 2013 value -- and skeptics who call the company a value trap and foresee a commoditization of its premium-priced tech products.

In the interim, the more urgent iPhone 5 story may have little to do with Apple or its shares.

As telecom giants Verizon and AT&T prepare to report fourth-quarter earnings, analysts are bracing for the full impact of smartphone subsidies and, in particular, the earnings hit that might come from an entire quarter worth of subsidized iPhone 5 smartphone sales.

Carriers already have indicated that Apple's newest smartphone will have an impact on earnings, even if trends like underlying subscriber and average-revenue-per-user growth indicate a strong outlook for the industry's top players.

Earlier in January, Verizon CEO Lowell McAdam said the company added 2.1 million wireless subscribers in the fourth quarter, "a truly impressive result," according to Craig Moffett of Bernstein Research. Still, the oftent bearish telecom analyst noted such subscriber growth may come at a cost, highlighting two January 8-K filings Verizon made with the Securities and Exchange Commission that indicate wireless service margins for the fourth quarter might fall on a year-over-year basis.

A decline in wireless margins as a result of subsidized new iPhone and Google ( GOOG) Android-operated handsets would cut against three successive quarters where Verizon's margins have improved, according to a Monday note by Moffett. It means investors in Verizon and AT&T might have to temper expectations about sustainable wireless profitability.

On Monday, UBS analyst John Hodulik downgraded Verizon from 'Buy' to 'Neutral' on expectations of lower than expected wireless and wireline profitability and a lack of "positive catalysts." Still, in spite of fourth quarter earnings concerns, Hodulik noted a strong long-term outlook for the carrier.

"We continue to believe Verizon to be the leading wireless company in the U.S. given its network position, continued strong share gains, high single-digit service revenue growth and the highest margins in the industry," wrote Hodulik.

A scenario of fourth-quarter telecom carrier earnings weakness could either vindicate long-time skeptics of wireless profitability. A moderate earnings hit might give telecom investors little reason to believe the industry's economics aren't on a long-term uptrend headed into 2013.

Verizon reports earnings on Jan. 22, with analysts expecting 48 cents a share in profit on $32.1 billion in revenue, according to analyst estimates compiled by Bloomberg. AT&T reports on Jan. 24 with analysts expecting an adjusted profit of 55 cents a share in $29.7 billion in revenue, the Bloomberg data show.

Moffett of Bernstein Research and other industry bears have long pointed to a looming iPhone handset upgrade cycle as contradicting forecasts of structurally higher profits for wireless carriers.

"Verizon's margin for full year 2012 will be something like 46.8%, or perhaps a bit lower. In 2010, Verizon's margin was ... 47.0%. They're actually flat over the timeframe the margin expansion thesis gained popularity," writes Moffett. "For the foreseeable future, however, margin volatility rule s ... and that dictates that the sloppy margins the industry will surely post in Q4 must not be ignored."

Analysts across the telecom sector have slowly been cutting earnings expectations for Verizon an AT&T heading into the fourth quarter, highlighted by Hodulik's Monday morning downgrade.

In an early December research note, bullish comments made by AT&T about overall quarterly smartphone sales caused Guggenheim Partners analyst Shing Yin to cut fourth quarter earnings and margin forecasts for the carrier.

Given an estimate of 10 million smartphone sales in the fourth quarter - 80% of which Yin calculates are iPhones -- the analyst now sees wireless EBITDA margins at 31% for the quarter, bringing overall margins at or below 40% for the year.

"We believe 2012 upgrade rates had benefited from a one-time impact related to upgrade policy changes made in early 2011. Now that this one-time impact has passed, we expect upgrade rates, and subsidy expense, to be higher in 2013," wrote Yin, in a Dec. 6 note to clients that followed comments made by AT&T's head of wireless.

That insight into what the analyst calls the "basic principles of smartphonomics' caused Yin to cut AT&T's price target from $35 a share to $33. Yin made a similar downward revision following Verizon's January disclosure of smartphone sales and subscriber growth.

The potential deterioration in wireless margins for growing industry players comes at a time when the likes of Sprint ( S - Get Report), the industry's number three player, are investing billions to grow out wireless networks and take on smartphone users. So far, however, efforts to handle the iPhone and slow-moving network upgrades have led to subscriber losses that raise more questions then they answer.

Meanwhile, the Wall Street Journal's report that Apple may cut second quarter iPhone supplier orders by 50% was received with some skepticism by tech analysts.

Notably, UBS analyst Steven Milunovich wrote in a note to clients that the report may be citing old news. "The article says Apple notified suppliers of the cutlast month, which is when we and most of the Street reported it. Consequently, itappears this is old news--our analysts indicate no changes since," wrote Milunovich.

In December, UBS cut its iPhone 5 order estimates by five million handsets a quarter due to the 30% production cut being reported out of Asia. At that time, UBS had estimated Apple's second quarter iPhone shipments would total 35 million handsets, at maximum.

Wells Fargo analyst Maynard Um added in a note to clients, that reports of supplier cuts might have already been anticipated given Apple's optimistic forecast of second quarter iPhone 5 sales.

" Investors should not put too much merit in the 65 million estimate as order cuts are not new news and the likelihood that Apple would have shipped 65 million iPhone 5's for the March quarter would have been miniscule," wrote Um, in a note to clients.

For investors growing tired on the tick-by-tick hysteria surrounding Apple's value and shares, a focus on the iPhone's impact on overall telecom carrier profits may prove to be a far more revealing exercise.

Watch wireless margins to either provide a wrench in the profitability story of telecom giants, or to quiet skeptics once and for all.

-- Written by Antoine Gara in New York