Economic Calendar

Thursday, October 6, 2011

AT&T May Be ‘Big Winner’ With New IPhone in Battle With Verizon Wireless

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By Scott Moritz and Sarah Frier - Oct 6, 2011 3:18 AM GMT+0700
Enlarge image AT&T May Be ‘Big Winner’ With New IPhone

An advertisement for the Apple iPhone is displayed in the window of an AT&T Wireless store in San Francisco. Photographer: Justin Sullivan/Getty Images

Oct. 5 (Bloomberg) -- Francisco Jeronimo, research manager at IDC in London, discusses Apple Inc.'s new iPhone 4S and its potential impact on the smartphone market. He speaks with Francine Lacqua on Bloomberg Television's "The Pulse." (Source: Bloomberg)

Oct. 5 (Bloomberg) -- Gene Munster, an analyst at Piper Jaffray Cos., talks about the Apple Inc.'s new iPhone and the outlook for the smartphone market. Munster, speaking with Erik Schatzker and Jon Erlichman on Bloomberg Television's "InsideTrack," also discusses Apple's share performance and possible television development plans. (Source: Bloomberg)


AT&T Inc. (T), the second-largest U.S. wireless operator, may gain an edge against its rivals with Apple Inc. (AAPL)’s latest iPhone announcements.

AT&T uses network technology designed to handle data traffic for iPhone 4S, the model unveiled yesterday, at as much as twice the speed of Verizon Wireless and Sprint Nextel Corp. (S), according to Apple. AT&T will also have an exclusive on the cheaper iPhone 3GS, which the company will give away with a two- year service contract.

The result may be that AT&T will have an advantage in drawing new customers against Verizon Wireless, the country’s largest carrier, and Sprint, which will be offering the Apple device for the first time this fall, said James Dailey, chief investment officer at Team Financial Asset Management LLC.

“There could be a competitive advantage,” Dailey, who is based in Harrisburg, Pennsylvania, and holds AT&T shares, said in an interview. “That could shift some momentum back to AT&T from Verizon.”

The AT&T iPhone 4S uses a faster version of technology called high-speed packet access, or HSPA, that increases speeds to as much as 14.4 megabits per second. The Verizon and Sprint iPhones use a technology called CDMA, or code division multiple access, for which there’s no comparable speed jump.

“The big winner on this phone is AT&T,” said Roger Entner, a wireless strategist with Boston-based Recon Analytics.

Beyond Product Specs

For Verizon, which outpaced AT&T in subscriber growth in the second quarter, the relative speeds of the Apple iPhone may make it more challenging to draw new customers in the fourth quarter, said Todd Rethemeier, an analyst with Hudson Square Research in New York.

“Verizon is going to be marketing the exact same phone that AT&T and Sprint have, except it will be 3G with a limited data plan,” Rethemeier said in a note today. “We think this puts Verizon at a significant marketing disadvantage.”

Verizon Wireless said customers will chose a carrier because of factors that go beyond product specifications.

“While iPhone 4S may look like the same device across all carriers, customers know they are choosing reliability when they select a Verizon Wireless iPhone 4S,” said Marni Walden, the company’s chief marketing officer.

AT&T, based in Dallas, rose 43 cents to $28.31 at 4 p.m. on the New York Stock Exchange. The stock has dropped 3.6 percent this year. Verizon Communications Inc. (VZ), based in New York, dropped 13 cents to $35.77, while Sprint, based in Overland Park, Kansas, closed unchanged at $2.86.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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