When it comes to accounting for it, subsidies like all other expenses by definition come out of revenue, not earnings. According to JL Gassee, the ARPU for mos

When it comes to accounting for it, subsidies like all other expenses by definition come out of revenue, not earnings. According to JL Gassee, the ARPU for most cellphones is $46.09, for iPhones it is approaching $120 (inclusive of the subsidy). He quotes: "AT&T CEO Randall Stephenson pronounced himself happy with the 'over $100' ARPU from iPhone subscribers." There is a very healthy amount there to absorb the subsidy plus cost of providing voice + data.