Two financial analysts have issued research reports stating that they expect Apple to not only stay with AT&T, its much-maligned exclusive iPhone carrier partner, but that the deal might even be extended.
For months there has been speculation and wishful thinking that Apple (NASDAQ: AAPL) would abandon AT&T and its troubled, congested 3G network for the faster, wider coverage of Verizon Wireless (NYSE: VZ).
As one analyst recently told InternetNews.com, Apple is unlikely to make a second type of phone for Verizon’s network (CDMA) along with AT&T’s network (GSM). If there ever is a Verizon iPhone, it will come in two to three years when Verizon rolls out 4G/LTE technology, which AT&T is also embracing. Then Apple could make just one phone that both carriers, and potentially others, could support.
Plus, no one really knows the length of the contract the two firms signed in 2007. Some say three years, other say five. Neither party has revealed the terms or shown any sign that they intend to.
The iPad factor
Barclays Capital analyst Vijay Jayant today commented on the partnership in a report on AT&T, where he reduced his 2010 EPS forecast to $2.19 from $2.26 for unrelated reasons. He noted that investors were concerned with the potential for losing the exclusivity of the iPhone, but also that the iPad was a positive indicator.
“(The) launch of Apple’s iPad on AT&T’s network is a vote of confidence in AT&T’s network by the equipment maker,” Jayant wrote. “While iPad sales are unlikely to materially impact wireless revenues in the short term, selecting AT&T to launch its second major communications product reflects Apple’s bias for the global GSM platform and the prospects of AT&T’s network capability. Moreover, it could suggest the iPhone exclusivity may continue, at least through the end of 2010.”
Separately, Pacific Crest analyst Steve Clement also cited the iPad deal as a sign “the tone from Apple is improving.” Clement said he believes current thinking on Wall Street largely assumes AT&T will keep exclusivity through 2010.
Clement has felt AT&T would lose Apple, but noted that AT&T’s plan to increase capital expenditures in 2010 could be a sign that the carrier intends to increase its bandwidth capacity to accommodate keeping the iPhone solely on its network.
These two comments come after Jonathan Chaplin at Credit Suisse said last week there was a “75 percent chance” Apple would stay with AT&T.