AT&T preps for Verizon iPhone with new ads, price cuts

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Now that the Verizon Wireless (NYSE:VZ) iPhone is official, all eyes turn to AT&T Mobility (NYSE:T) to assess the impact. And, according to AT&T, it's ready.

The company, which has enjoyed a three-and-a-half year exclusive grip in the U.S. on Apple's (NASDAQ:AAPL) iconic iPhone device, has been putting work into its marketing, its wireless network and its relationships with other smartphone makers as it prepares to compete with other iPhone vendors.

AT&T Mobility CEO Ralph de la Vega told the Wall Street Journal that the company has been prepared to lose its iPhone exclusivity for a number of years. "We are ready for it," he said, adding that AT&T will remain viable without an exclusive iPhone.

Specifically, the company is expected to debut a new ad campaign that will argue the iPhone works faster and better on its GSM-based network. In addition, according to Credit Suisse, AT&T has been successfully getting new iPhone customers onto two-year contracts; the investment research firm estimated that 86 percent, or 15.9 million, iPhone subscribers are on two-year contracts with the operator.

For its part, AT&T offered a well-rehearsed argument on the topic: The carrier said it has a number of other exclusive devices including the BlackBerry Torch; that it spent $18 billion on its wireless networks last year; that 80 percent of current iPhone subscribers are on family or business plans; and that the CDMA iPhone will suffer from slower speeds, an inability to connect to GSM networks worldwide, and an inability to talk and surf at the same time.

"For iPhone users who want the fastest speeds, the ability to talk and use apps at the same time, and unsurpassed global coverage, the only choice is AT&T," the carrier said.

Nevertheless, BTIG analyst Walter Piecyk estimated AT&T will lose as many as 5 million iPhone customers by the end of 2012. "While we believe that AT&T will continue to sell iPhones to new and existing users after its exclusivity period ends, we believe it will lose more customers than it adds," he wrote.

Wall Street seemed to share a wariness over AT&T's prospects; the carrier's stock was down around 1 percent to around $28 per share, though AT&T's stock has been gradually gaining ground during the past few months.

For more:
- see this WSJ report (sub. req.)
- see this BTIG blog post (reg. req.)

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