AT&T (T) has made it clear, very clear that the Apple (AAPL) iPhone is critical to its strategy to increase cellular revenue as its residential landline business shrinks.
The iPhone helps AT&T get new customers and win customers from its rivals Verizon Wireless and Sprint (S).
But, news sources say that AT&T’s exclusive deal to sell the popular handset in the US may be about to end.
According to USA Today,”Verizon and Apple are discussing the possible development of an iPhone for Verizon, with the goal of introducing it next year.” That means that the two largest cellular providers in the country would be going toe-to-toe trying to get consumers to buy the iPhone to use on their 3G system
If Verizon gets an iPhone franchise, it would be a big blow to the earnings future of AT&T. Analysts have counted on the deal with Apple to drive subscribers and data use on the company’s network to keep revenue at the wireless unit rising.
AT&T’s stock looses a lot of its attraction if the engine of it cellular growth breaks down.
Douglas A. McIntyre