AT&T: iPhone is keeping us rich

Whether or not Apple renews its exclusive iPhone contract with AT&T for the coming year, several million iPhone buyers helped AT&T beat the street in its most recent earnings report.

AT&T’s first-quarter profit, prior to a previously announced billion-dollar charge to cover the anticipated cost of U.S. healthcare reform, was 59 cents per share. That’s about 10 percent higher than Wall Street’s forecast of 54 cents.

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“Now that they have a large enough base of iPhone users, investors are starting to see how profitable the device is for AT&T,” Piper Jaffray analyst Christopher Larsen told Reuters. In the first quarter of 2010, AT&T claims to have activated 2.7 million iPhones, and 891,000 of those were for new subscribers.

AT&T subsidizes the iPhones by paying part of their cost to Apple in order to lower the price for buyers to as low as $99, rather than the $599 price of the first iPhones in 2007. Overall, though, the company makes money from iPhone owners — first by charging them $18 to activate the phone in a store, then by billing them $70 or more per month — that’s $840-plus per year — for a long-term contract.

In response to complaints about weak iPhone coverage by AT&T customers, the company recently began selling home iPhone range boosters made by Cisco.

[Image : Unwired View]