AT&T Remains Confident About iPhone Growth

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AT&T CEO Randall Stephenson spoke to analysts during the company’s 4Q10 conference call. He remained optimistic that iPhone subscribers would grow despite AT&T’s loss of exclusivity and predictions in some circles that there would be a mass exodus of iPhone subscribers to Verizon.

[The] “iPhone is still strong and we had one of the best quarters ever… We sold [more than] 4 million,” Mr. Stephenson said according to Computerworld on Thursday. He went on to say, “We feel with a little volatility, we can grow contract subscribers this year.”

However, the AT&T CEO also indicated some uncertainty about the future. “It may be rocky, volatile and hard to predict, but as the market stabilizes, we will work through it.”

AT&T’s CFO Rick Lindner put a positive spin on the loss of exclusivity, saying, “We are seeing continued strong iPhone sales.”

Earlier in the day, AT&T’s official statement gave some details: “AT&T continued to grow its base of integrated device subscribers. More than 7.4 million postpaid integrated devices were sold in the fourth quarter, including the second-largest quarterly number of upgrades in the company’s history. Integrated device sales included 4.1 million iPhone activations.” In the last two quarters, AT&T has sold about 9 million iPhones.

AT&T has about 95 million subscribers, a number comparable to Verizon. To expect that tens of millions of AT&T iPhone customers would depart for Verizon, markedly upsetting the balance between the two companies doesn’t take into account a host of market and technical factors. AT&T’s statements today would seem to confirm that, after a period of instability, growth and equilibrium with Verizon will be obtained.

Also, it can be expected that Verizon, given the demand for the iPhone will decline to set prices significantly lower than AT&T’s, given the need to generate maximum revenue. As a result, many AT&T customers, faced with early termination fees, CDMA limitations and equivalent prices at Verizon may think twice. Of course, those with very bad AT&T coverage may be forced to switch, but to mitigate that, AT&T is reported to be giving away free Microcells to customers with weak 3G signals.

Also, to retain some AT&T customers who have threatened to jump ship, the carrier has allowed then to re-establish their unlimited data plans which they had previously given up.

All in all, it appears that AT&T will make every effort to stem the tide to Verizon, and, as it should be, iPhone customers are the winners no matter where they end up.

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