Apple's Verizon iPhone could mean tough year for AT&T, analysts say

Posted:
in iPhone edited January 2014
On the eve of the expected Verizon iPhone launch, Wall Street analysts are chiming in with warnings that AT&T could be in for a rough year, with one analyst predicting that AT&T will "get demolished."



With over 3 years of iPhone exclusivity in the U.S., AT&T has enjoyed a steady stream of new subscribers, but the announcement of a Verizon-compatible CDMA iPhone at Tuesday's Verizon event could disrupt AT&T's growth streak.



"I think AT&T is going to get demolished," Reuters reports Gleacher & Co analyst Brian Marshall as saying. Earlier comments from Marshall suggest that Verizon could see 5 percent of its existing customers upgrade to the iPhone in the initial launch quarter, a pace faster than that of the original iPhone launch on AT&T in 2007.



According to the Reuters report, many analysts see AT&T losing contract customers this quarter, which would be a first since AT&T was formed through the merger of AT&T Wireless and Cingular Wireless in 2004.



Some analysts' reports predict 2011 subscriber losses of over 3 million customers for AT&T. Todd Rethemeier, an analyst with Hudson Square, is on the "pessimistic end" of that scale.



"There's been 3 years where Verizon's customer base has had iPhone envy. They're going to want to get it as soon as they can," said Rethemeier, who believes AT&T will lose 3.5 million high-value contract customers in 2011.



Steve Clement of Pacific Crest expects AT&T to lose customers in the first half of the year, eventually ending the year with no net gains in subscribers.



Barclays analyst James Ratcliffe, considered one of the more optimistic of analysts covering AT&T, sees the carrier going through a tough 2011, but still expects AT&T to add 1.4 million contract customers this year. According to Ratcliffe, about 15 million new AT&T iPhone customers from 2010 are unable to leave for Verizon Wireless without "great expense" from early termination fees on AT&T's contracts.



An AT&T spokesman downplayed analysts' concerns, noting that the carrier added 5.2 million iPhone customers in the third quarter in spite of rumors of an upcoming Verizon iPhone.



AT&T stock dropped 1.8 percent on Monday, closing at $28.34. Meanwhile, investors were bullish on Apple, with shares of Apple stock closing up nearly 2 percent at an all-time high of $342.46.



Verizon has long held the No. 1 spot in the U.S., though AT&T's strong growth, largely due to iPhone exclusivity, has brought it within striking distance. As of the end of September, Verizon had 93.2 million subscribers, while AT&T had 92.8 million.



Earlier Monday, Piper Jaffray analyst Gene Munster predicted that Verizon could cannibalize as many as 6.5 million iPhone sales from AT&T.



However, third place Sprint and fourth place T-Mobile could stand to lose the most, analysts say. Shaw Wu of Kaufman Bros. believes Verizon may have paid extra to keep the iPhone between AT&T and itself in the U.S. "Because of this, we believe the iPhone isn't likely to appear on T-Mobile USA and/or Sprint until later," Wu said in a note to investors Monday.



Ahead of the Verizon iPhone launch, AT&T and Verizon are touting their respective network speeds. On Monday, AT&T spokesman Larry Solomon said iPhone users on Verizon should be "ready for life in the slow lane." A third-party study in November found that AT&T had wireless speeds as much as 60 percent faster than its competitors.



A subsequent Wall Street Journal report claimed that Verizon remained confident in its network, citing sources familiar with the matter.



Verizon will reportedly offer unlimited data plans for the iPhone on Tuesday. AT&T ceased offering unlimited data plans to new subscribers last year, prior to the release of the iPhone 4.
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Comments

  • Reply 1 of 42
    MacProMacPro Posts: 18,150member
    AT&T will be interesting to watch. If Apple has that much affect on companies this size it is truly staggering. I say that from the point of view of having been with Apple when it nearly died. I still have problems taking it all in!
  • Reply 2 of 42
    Quote:
    Originally Posted by AppleInsider View Post




    "I think AT&T is going to get demolished," Reuters reports Gleacher & Co analyst Brian Marshall as saying.



    What is Marshall's track record?
  • Reply 3 of 42
    Yeah, they can be sure about their network - steady slow, equally for everyone. There is no network capable handling over 5 million data hungry devices without any strain issues. Verizon's network was not used much because it was pain to work on those phones they had. I have tried several of them and just to scroll down the website took me a minute - that's why their network had no problems.
  • Reply 4 of 42
    This is the bit of news, that I will be most interested, in finding out.



    I always peruse data-heavy applications, on my long calls.

    NOT having this supported on the Verizon Network would be a huge deal breaker.



    Not only for me but for MANY of the AT&T converts.



    For those that never had it, ie. Verizon's current customer base, ignorance is bliss.
  • Reply 5 of 42
    I'm sure AT&T has it's problems, but I've been with the company for years before the iPhone and since the first version of the iPhone and have been very satisfied. Seems like it's just the hot topic to complain about AT&T. That said I'm hoping the introduction of the iPhone on Verizon will bring competition in service and more so, pricing. I think its a win win situation for the customer.
  • Reply 6 of 42
    Yes, if this rumor is true, it is going to hurt ATT. No two ways about it. Will it gut them and leave them for dead? Absolutely not. I work for VZW and do not want to see any of the competitors go belly up. Competition is good for everyone. Look what the iPhone did for the smart phone market. If not for them, we would still be using Treo's or a device running WinMo 6.7.
  • Reply 7 of 42
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by harmsway View Post


    I'm sure AT&T has it's problems, but I've been with the company for years before the iPhone and since the first version of the iPhone and have been very satisfied. Seems like it's just the hot topic to complain about AT&T. That said I'm hoping the introduction of the iPhone on Verizon will bring competition in service and more so, pricing. I think its a win win situation for the customer.



    I do not expect to see lower pricing for service plans until the iPhone appears on Sprint or T-Mobile.
  • Reply 8 of 42
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by TwiztdWun View Post


    Yes, if this rumor is true, it is going to hurt ATT. No two ways about it. Will it gut them and leave them for dead? Absolutely not. I work for VZW and do not want to see any of the competitors go belly up. Competition is good for everyone. Look what the iPhone did for the smart phone market. If not for them, we would still be using Treo's or a device running WinMo 6.7.



    Definitely a net positive for Verizon, Apple and consumers. A net negative for ATT, Sprint and T-Mobile.
  • Reply 9 of 42
    Doesn't take the brains of analysts to figure that out.
  • Reply 10 of 42
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by darthraige View Post


    Doesn't take the brains of analysts to figure that out.



    True. It is interesting to try to determine who is most adversely affected. solopsism and a number of analysts seem to think Sprint and T-Mobile; I think ATT even though I am not sure the carnage will be as great as projected.
  • Reply 11 of 42
    Have we heard what time tomorrow the announcement is and do we know if there is any live video stream??
  • Reply 12 of 42
    Quote:
    Originally Posted by bcahill009 View Post


    Have we heard what time tomorrow the announcement is and do we know if there is any live video stream??



    11am Eastern. No stream that I am aware of.
  • Reply 13 of 42
    ...I'm betting on 11:11 AM







    Quote:
    Originally Posted by bcahill009 View Post


    Have we heard what time tomorrow the announcement is and do we know if there is any live video stream??



  • Reply 14 of 42
    shobizshobiz Posts: 207member
    Here we go... AT&T is doomed....
  • Reply 15 of 42
    Time to buy T-Mobile stock when it hits the crapper! So I can make it up when the iPhone launches 3 years later on T-Mobile USA
  • Reply 16 of 42
    Quote:
    Originally Posted by bcahill009 View Post


    Have we heard what time tomorrow the announcement is and do we know if there is any live video stream??



    Best coverage you'll get. From Twitter...



    @leolaporte Leo Laporte

    We're live at 11a Pacific/8a Eastern/1900 UTC with Verizon iPhone coverage Tuesday. Verizon isn't streaming but Andy @Ihnatko will be there.



    http://live.twit.tv/
  • Reply 17 of 42
    Quote:
    Originally Posted by speedxdesign View Post


    Best coverage you'll get. From Twitter...



    @leolaporte Leo Laporte

    We're live at 11a Pacific/8a Eastern/1900 UTC with Verizon iPhone coverage Tuesday. Verizon isn't streaming but Andy @Ihnatko will be there.



    http://live.twit.tv/



    Those times are reversed.
  • Reply 18 of 42
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by penchanted View Post


    True. It is interesting to try to determine who is most adversely affected. solipsism and a number of analysts seem to think Sprint and T-Mobile; I think ATT even though I am not sure the carnage will be as great as projected.



    This is my reasoning. People that wanted the iPhone and were willing to deal with AT&T already have it. They had 30 days to return it with no restocking fee and a voiding of their contract if they disn’t like it or AT&T simply didn’t work for them.



    That means that most AT&T subscribers are probably okay with the network, and since most iPhone users are likely iPhone 4 users that are only about 7 months into a 24 month contract (Don’t forget the free pass AT&T gave to 3GS owners to get the iPhone 4) That means they really have to dislike AT&T right now to pay $255 ($325 ETF minus $10/month) just to get to Verizon for the iPhone 4 that will have its own carrier downsides.



    That tells me that it’ll be Verizon’s customers who make the biggest jump and shunning smartphones from other vendors, and Sprint and T-Mobile users making the next biggest jump to go to Verizon for the iPhone.



    Will there be a few that jump from AT&T? Of course, but not in the droves some suggest. When the iPhone 5 CDMA comes out there will even be more that jump from AT&T, but there will still be more from the other carriers. Now, as the end of these iPhone contracts rise we’ll likely see even more but that is some time away and we have yet to see how Verizon’s network will be for the iPhone and if the other carriers will get the device by then.







    PS:"Four years and two days ago Steve Jobs announced the iPhone. He said it was an iPod, a Phone, and an Internet Communicator. Today, I’d like to announce that it’s iPod, a Phone that works, and an Internet Communicator."
  • Reply 19 of 42
    Quote:
    Originally Posted by gabberattack View Post


    Yeah, they can be sure about their network - steady slow, equally for everyone. There is no network capable handling over 5 million data hungry devices without any strain issues. Verizon's network was not used much because it was pain to work on those phones they had. I have tried several of them and just to scroll down the website took me a minute - that's why their network had no problems.



    The data speed depends on most handsets on the processor. Verizon has much more then 5 million hungry data users....what they have is called BACKHAUL and sorry they really are much larger then at&t. I remember when a friend from apple used to make fun of that they spent so much money on owning the network....No one doubts that so much now. I'll consider an iphone once it's 4g...(if the rumor is true the SUMMER) but you sir haven't kept up on android.

  • Reply 20 of 42
    Quote:
    Originally Posted by solipsism View Post


    That means that most AT&T subscribers are probably okay with the network, and since most iPhone users are likely iPhone 4 users that are only about 7 months into a 24 month contract (Don?t forget the free pass AT&T gave to 3GS owners to get the iPhone 4) That means they really have to dislike AT&T right now to pay $255 ($325 ETF minus $10/month) just to get to Verizon for the iPhone 4 that will have its own carrier downsides.



    Yeah, I understand your reasoning but I've seen so many posts and even know a few people who deliberately held back from upgrading in the hopes of the Verizon iPhone. We are in agreement that ATT is likely to suffer less than some are predicting.
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