Carrier's fate may be decided regardless

Several analysts have expressed conflicting views on AT&T's iPhone exclusivity, and whether or not it will end in 2010 or be extended another year. Craig Moffett of Bernstein Research has raised his Verizon rating from Underperform to Neutral, in part because there may be little future for AT&T even if Verizon does not get the US iPhone. AT&T's growth will "sputter" without the iPhone as a guaranteed draw, says Moffett.

Analysts with Pacific Crest and Barclays Capital, however, argue that AT&T could do better than expected during 2010, and that it may be likely to hold onto its iPhone deal until 2011. Performance boosters are said to include factors like high smartphone penetration and "limited" pension expenses. Pacific Crest's Steve Clement observes that the evidence for an extended iPhone contract may derive from the iPad, since the 3G version will work only with AT&T in the US.

Apple has been improving its tone with AT&T as a whole, adds Clement. Also pointing to longer exclusivity are said to be a conservative wireless margin guidance, combined with an aggressive capex guidance. The Pacific, Barclays and Bernstein analysts all caution though that AT&T will probably suffer significantly should exclusivity vanish in 2010. Moffett remarks that AT&T could in fact show net subscriber loss based purely on the iPhone.

by MacNN Staff