New iPhone Threatens to Reheat European Carrier Price War

Last time Vodafone Group said no to subsidizing a new iPhone on Apple’s terms, consumers across Europe fled to operators that offered discounts and the handset became one of the most popular devices in history. As Apple unveils a new version of the iPhone, carriers want to avoid that mistake from five years ago.

Vodafone and peers including Telefonica, having started moving away from subsidizing smartphones this year in markets such as Spain and the U.K., may be compelled back to compete on prices. The handset will meet such pent-up demand that some carriers will be tempted to offer it at a reduced price to win market share. That threatens to force others out of their savings tactics, pushing the industry back into a margin- battering discount war. Subsidies cost European carriers 12 percent to 14 percent of their wireless revenue, according to data compiled by Bloomberg Industries.