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

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.