Commentary

Verizon iPhone Would Cost AT&T 1.4 Million Customers

by Mark Walsh , September 21, 2010

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If, as long rumored, Verizon Wireless gets the iPhone next year, there's little doubt some AT&T customers with the Apple device would shift to Verizon. But how many? In a new report highlighted by MobileBeat, Credit Suisse took a crack at estimating the impact on AT&T. The Wall Street firm projects 23% of AT&T iPhone subscribers, or about 1.4 million people, would drop the carrier for Verizon in the event it begins offering the Apple phone. Ouch.

Bloomberg has reported on a supposed Feb. 15 launch date for the Verizon iPhone. A separate report indicated Apple has placed an order for millions of Qualcomm chipsets designed for the CDMA network architecture Verizon employs as opposed to AT&T's GSM network. Whether a Verizon iPhone will actually become a reality next year, though, is still a matter of speculation.

But if AT&T loses its exclusive deal for the iPhone, Credit Suisse predicts its wireless subscriptions will be roughly flat in 2011 as customers switch to Verizon or other carriers, rather than the 1.5 million to 2 million users AT&T would've added otherwise.

Nevertheless, the investment bank raised its rating for AT&T from "neutral" to "outperform," explaining that the carrier was undervalued compared to Verizon -- even its main rival picks up the iPhone next year. Credit Suisse estimates AT&T will produce a 20% return on shares in 2011.

But it's hard to see investors not punishing AT&T 's stock if it loses its iPhone exclusivity, given the key role the device has played in boosting its wireless business. Through the second quarter of 2010, the iPhone has accounted for 24 million activations and 30% of all new subscriptions in 2009 and 2010.

An exodus of iPhone users to Verizon also wouldn't serve as a great advertisement for AT&T's service, which iPhone users in New York City and San Francisco in particular have long complained about. AT&T has taken steps to improve network performance in the two iPhone-centric cities since the end of 2009

The eventual loss of iPhone exclusivity may be one reason AT&T has so aggressively touted the growth of its business in powering "connected devices" including e-readers, netbooks, digital photo frames, and GPS devices. In the second quarter, AT&T said it added nearly 900,000 connected devices for a total of 6.7 million. The growth in emerging devices helped the carrier increased mobile data revenue to $4.4 billion in the quarter, up from $396 million a year ago.

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3 comments about "Verizon iPhone Would Cost AT&T 1.4 Million Customers".

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David Diekmann from Bloomstruck, September 21, 2010 at 5:16 p.m.
The ONLY reason my wife and I are still with ATT is because she got an iPhone as an xmas gift last December. Otherwise, we'd be LONG gone from the ATT client roster. Sick and tired of dropped calls, no service, SOS only, then 5 bars, all within one minute.
When Verizon gets the iPhone, not only will they lose my wife as an iPhone customer but my line will port right on over to Verizon too. (any chance we can accelerate that launch date, there, Mr. Jobs????)
Reply

John Berard from Credible Context, September 21, 2010 at 5:45 p.m.

As it is said when a member of the House of Representatives becomes a Senator "it raises the IQ of both bodies," so too will the 1.4 million iPhone users who shift benefit performance on both networks.

Philip Sievers from Seiter & Miller, September 22, 2010 at 9:12 a.m.

I have never had a problem with ATT. I must be the exception. As for my iPhone, It's a mixed blessing, better for apps than phone and email