Shares of AT&T Inc fell 1.5 percent Monday as investors bet that sales of an Apple iPhone at its bigger rival Verizon Wireless would take away customers from AT&T.
Shares of AT&T, the No. 2 U.S. mobile service, fell a day before the expected announcement of the end of AT&T's more than three years of exclusive U.S. rights to sell the popular Apple phone.
Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc, will sell the iPhone under its existing wireless service plans, which include unlimited web surfing, a source told Reuters.
This year AT&T eliminated its unlimited wireless data plans. Pacific Crest analyst Steve Clement said Verizon iPhone sales, expected to kick off around the end of January, would translate to customer losses for AT&T and make it tough for AT&T to report any net customer additions for 2011.
However, Verizon Wireless could report as many as 2.5 million net new customers this year, Clement estimated. He noted that in the third quarter iPhone accounted for about 40 percent of AT&T's gross additions, which exclude customer cancellations or churn.
"AT&T will be able to manage the churn fairly well but there's a big hole they have to fill in gross adds so it wouldn't be surprising to see them go negative for a quarter or two," Clement said.
One saving grace for AT&T could be the fact that 80 percent of its customers using smartphones such as iPhone are on family plans or business plans, which makes it less difficult for them to immediately leave for another operator.
Clement also noted that since AT&T reported 5.2 million iPhone activations in the third quarter, when a Verizon iPhone was already widely expected, these customers would be locked into the operator for another two years.
As a result he suggested that Verizon's offer of unlimited service plans for iPhone customers may have a bigger impact in helping it steal customers from smaller rivals Sprint Nextel and T-Mobile USA, a unit of Deutsche Telekom.
