iPhone5 won't rake in as much cash for telcos

Subsidy and payback period would be just like that of iPhone 4S.

According to CIMB, the iPhone 5 was launched on 21 Sep and pricing by all three telcos was consistent with our expectations. No subsidy war is on the horizon with rational pricing and subsidies by all three telcos.

Here's more from CIMB:

Based on past experience, we believe that all three are probably aware of the smartphone market's saturation, where any ARPU uplift is unlikely to be material. StarHub again has been the least aggressive of the lot, offering the least amount of subsidies, while M1 generally offered the highest.

The fairly rational pricing suggests that StarHub would not be too affected by the iPhone 5 although there would be some impact on 4Q margins from the launch and also from year-end festivities. Nevertheless, we expect an eventual recovery.

Based on our industry checks, we estimate the new iPhone 5's subsidy and payback period would remain roughly the same as that of the iPhone 4S, i.e. 6-8 months. In addition, we suspect telcos could benefit from the strengthening of the Singaporean dollar against the US dollar as the cost of the iPhone to telcos is denominated in US dollars.

Moreover, anecdotal evidence suggests that Singapore users are getting more used to Android phones as its applications are more flexible (i.e. free and customisable) vs. the iPhone.