Verizon has reported a Q4 2011 loss of over $2 billion, partly due to the higher subsidies the company is forced to pay to sell the Apple iPhone.
The wireless carrier, which revealed a profit of $2.64 billion for the corresponding quarter last year, began selling the iPhone 4 in February 2011, ending years of AT&T exclusivity.
Verizon is forced to sell each iPhone at a big loss in order to tie users into expensive two-year contracts.
Very cash-flow positive
According to Bloomberg, subsidising handsets has allowed the company to add 1.2 million new subscribers, which is expected to pay off in monthly fees further down the line.
"The average smartphone customer will spend about $2,000 over the two-year contract, if the subsidy is $400, you're still getting $1,600, and that's very cash-flow positive," said BarCap analyst James Radcliffe.
Verizon sold 4.3 million iPhone's in the period leading up to Christmas, which doubled the figure from the previous quarter.
However, a large part of the $4.5 billion negative swing in profits can be attributed to a pension charge which cost the company $3.4 billion last quarter.