iPhone 5 Woes Create a Verizon, AT&T Buying Opportunity: Analysts

The argument is borne out in the numbers and gives investors reason to decide, in fourth quarter earnings, whether they favor overall wireless subscriber and revenue growth, or quarter-to-quarter improvements on profit margins.

According to Schildkraut's calculations, Verizon will add 2.3 million total retail smartphone subscribers, representing an over 50% year-over-year surge that will also drive overall wireless revenue nearly 10% higher to $19.1 billion for the fourth quarter. Margins, on the other hand, are estimated to fall over 15% versus the third quarter as subsidized iPhone sales cut wireless margins from an estimated 46.7% to 41.7%.

At AT&T, a similar story of wireless revenue growth and margin pressure is expected to play out in the fourth quarter.

The key question is whether investors should care. Schildkraut argues investors should accumulate shares were Verizon or AT&T to miss earnings. He rates both carriers 'equal-weight' and gives them price targets of $47 a share and $36.50, respectively. Verizon and AT&T also pay near 5% dividend yields

Other telecom analysts, notably Craig Moffett of Bernstein Research, have been far more alarmed by the interplay between iPhone subsidies and wireless margins... and with good reason.

Amid a mid-2012 telecom stock surge that put Verizon and AT&T among the top performers on the Dow Jones Industrial Average, Moffett argued iPhone subsidies could turn wireless margins negative, potentially disproving a fundamental shift in telecom profitability.

While a later than expected rollout of the iPhone 5 has buffered carriers from the full-impact of handset subsidies, Moffett's analysis appears to be playing out in persistent earnings downgrades for Verizon and AT&T.

While Verizon and AT&T are up over the past year, shares are down nearly 10% in the past three months, as investors brace for an iPhone-based earnings hit.

The real question for analysts like Moffett and wireless investors to ponder is whether after a iPhone subsidy hit plays out in fourth quarter telecom earnings, industry leaders like Verizon and AT&T come back into favor and become a safe holding for investors, as they were in 2012.