AT&T's Stephens: iPhone 5 won't increase churn

AT&T Mobility (NYSE:T) does not expect an exodus of customers leaving for other carriers amid the iPhone 5 launch, according to AT&T CFO John Stephens.

Speaking today at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference, Stephens was asked whether customers who upgraded to new iPhones and other smartphones in 2010 will leave now that their two-year contracts are over. Stephens noted that many of those customers may have upgraded to new contracts in 2011, before AT&T extended the period customers would need to wait to get an early upgrade.

Stephens said AT&T is operating in a competitive environment but is not vulnerable. "I don't think it's as a simple as saying it's the contract length," he said. "It's also when was the last time they refreshed their phone."

AT&T, like other Tier 1 carriers, will start taking pre-orders for the iPhone 5 Sept. 14 and will start selling the gadget Sept. 21. Stephens declined to predict how many iPhones AT&T will sell, but he did note that the company has a strong iPhone sales history. In the first five days of iPhone 4S availability last year AT&T sold one million 4S units. "That can kind of give you a sense of what it could be," he said. "I just mention that to you as a reference point."

Stephens also noted that AT&T's HSPA+ and LTE networks cover 275 million POPs, allowing customers to access faster speeds than Verizon Wireless' (NYSE:VZ) EV-DO network. Verizon's LTE network currently covers 75 percent of the U.S. population, around 235 million POPs, and the carrier plans to hit 260 million POPs by year-end. AT&T's LTE network covers more than 75 million POPs, and the carrier plans to expand that to 150 million POPs by year-end.

The AT&T executive also touched on several other issues, including the company's Mobile Share shared data plans. He said that so far the reaction to the company's shared plans, which AT&T started offering Aug. 23 to new and existing customers, has been positive. Customers are not required to switch to the new plans. "The results early on are very good," he said. "We are optimistic or positive about the fact that customers are buying bigger buckets or migrating toward bigger buckets."

Stephens also noted that while AT&T has acquired 700 MHz spectrum from Qualcomm (NASDAQ:QCOM) and hopes to acquire 2.3 GHz WCS spectrum from NextWave Wireless and other companies, more needs to be done to continue to get spectrum into the hands of carriers. He said the company is pleased with the progress it is has made in the past year to get more spectrum, and he said that AT&T is now confident about its five-year plan for its spectrum needs.

Additionally, Stephens said it was a good thing that the FCC plans to review its rules related to its spectrum screen, which helps determine how much spectrum a carrier can hold. "Certainly getting the rules out in the open with a clear understanding is important," he said.

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