Telstra is 1) not absorbing a A$400 phone subsidy and 2) is actually generating a small profit (A$4 per phone) out of the iPhones on lower priced plans (1GB to 2.5GB per month). Compare this to Samsung's phones and as expected Telstra is absorbing a subsidy of A$173 on lower priced plans (1GB to 2.5GB per month). We do not believe Telstra will be able to continue to use the iPhone as a profit centre long-term because 1) Vodafone in Australia already does not generate profits from this and 2) looking at the US and NZ markets both these markets do not use the iPhone as a profit centre.
