Apple Inc. (AAPL): Will the iPhone Make a Difference for T MOBILE US INC (TMUS)?

Apple Inc. (NASDAQ:AAPL) remains the dominant handset in the United States because of its distribution capabilities. On Mar. 26, T MOBILE US INC (NYSE:TMUS) announced that it would carry the iPhone 5. The iPhone 5 is the most popular phone on the network to date. The company was the last of the four major carriers to carry the iPhone, and became increasingly obvious that the company’s market share could fall even further if the company didn’t offer the smartphone as an option.

Basic metrics

Kantar Worldpanels estimates that iOS market share has been able to improve by 3.5% between March and May. T MOBILE US INC (NYSE:TMUS)states that the iPhone 5 was the best-selling phone on the network as it represented 31% of smartphone sales since March. The company really had no choice but to begin offering the phone, as market research indicates that consumers were planning to switch carriers due to network quality issues and the lack of an iPhone.

Source: Piper Jaffray

In a survey conducted by Piper Jaffray, 55% of respondents wanted to switch networks. While the traditional dictum in marketing is to analyze behavior rather than surveys, we still want to get a sense of how people feel about the network. With more than half wanting to make the switch, investors should not be investing into T MOBILE US INC (NYSE:TMUS).

Source: Ycharts

The company is reporting flattening revenue growth. Both market share data and historical sales data indicate that the company could have a lot of difficulty growing its earnings. There is potential for DISH Network Corp. (NASDAQ:DISH) buying out T MOBILE US INC (NYSE:TMUS), which may put the stock at a bit of a premium. Investing on the assumption of a buyout is risky, however, and investors could find higher yielding opportunities in other stocks for the same amount of risk.

T MOBILE US INC (NYSE:TMUS) will be undergoing $600 to $700 million in restructuring costs associated with its recent acquisition of MetroPCS Communications Inc (NYSE:PCS). The company successfully completed the acquisition in May. The short-term effects are an immediate boost to revenues, coupled with a substantial decrease in net income. Analysts estimate that the company will report an 82.2% year-over-year decline in earnings in 2013. Sales may be more heavily impacted to the downside than what analysts are currently anticipating, though, based on survey data. As a result, investors may be better positioned by owning Apple Inc. (NASDAQ:AAPL).

Apple remains a compelling alternative

For T MOBILE US INC (NYSE:TMUS) to benefit from adding the iPhone, the iPhone will have to continue selling well. Fortunately, I believe that Apple Inc. (NASDAQ:AAPL)will dominate the high-end of the smartphone market. Samsung may end up giving up more market share to Apple in the United States. With T-Mobile’s recent transition to the iPhone 5, the Samsung Galaxy S4 lost its grip of the last telecom network that didn’t have the iPhone.

The whole Android ecosystem is heavily unbalanced. Samsung is likely to stick around while the others may have difficulty becoming profitable as they will have to operate at incredible economies of scale to generate a profit.