You are better off accepting the return now, rather than being forced to accept the return after the buyer opens a "buyer protection" case against you.
Tell the buyer "Return the item for a refund."
If they haven't opened it, I would probably refund the purchase price, but not the shipping to the buyer. If the item hasn't been opened, and the buyer just failed to check coverage maps before they bought the item, that's really not your issue. You might include a link to the carrier's coverage map (opening in a new window) in your listings for cell phones in the future.
The buyer can get a refund for price + shipping if they open a buyer protection case.
If you refund the full purchase price without refunding the buyer's shipping, the buyer might still open a case and try to get their shipping back. It's much more difficult for the buyer to do that. They can still leave feedback and DSR's, though. So if they haven't left you a positive FB yet, you might want to refund in full. It's your call unless/until they open a buyer protection case against you.
You lock in your profit (or loss) when you buy the item.