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Investing.com -- Verizon (NYSE:VZ)'s latest phone metrics signal a soft demand for iPhones in the United States, UBS analysts said in a Tuesday note.

The company’s first-quarter postpaid upgrade metrics showed a continued trend of subdued smartphone demand, despite the introduction of the iPhone 16e towards the end of the quarter.

Verizon noted an increase in sales momentum entering April, following a March quarter that experienced a decline in consumer retail postpaid phone net additions, with a decrease of 356,000 compared to a 194,000 decline on March 24, 2022.

The telecom giant reported a loss of 289,000 retail postpaid net additions, which UBS analysts believe may be due to weaker promotional activity, against their estimate of a 230,000 loss.

The postpaid upgrade rate at Verizon fell 20 basis points year-over-year to 2.8%, which is the lowest first-quarter upgrade rate in recent years, slightly below UBS's estimate of 2.7%.

Meanwhile, wireless equipment revenue saw a marginal increase of 0.7% year-over-year, reaching $5.398 billion, compared to $5.361 billion last year and surpassing UBS's estimate of $5.117 billion.

Given that approximately 70% of iPhones sold in the U.S. are through wireless carriers like Verizon, the analysts at UBS consider Verizon's performance a reliable indicator of U.S. iPhone demand.

“Soft upgrade results on the postpaid side and flattish equipment revenue at Verizon suggests that smartphone demand remains sluggish in the U.S., which composes roughly 30% of global iPhone sell-through, Apple (NASDAQ:AAPL)'s largest iPhone market,” analysts led by David Vogt said.

They also point out that the reports of consumers purchasing iPhones in anticipation of tariffs in April had a negligible impact on Verizon's reported metrics for the quarter ending March 25, as any additional units shipped were added to Verizon's inventory rather than sold through to customers.

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