AT&T Debuts Windows Phone - Analyst Blog


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The second-largest U.S. mobile service provider AT&T Inc. ( T ) will sell Nokia Corporation 's ( NOK ) "Lumia 900" smartphone from April 9 onwards. The handset will be available for $99.99 with a two-year contract.

AT&T is the first ever carrier to offer 4G LTE Microsoft Corporation ( MSFT ) Windows Phone and has the exclusive right to sell the product. The company will also sell another Windows Phone - HTC Titan II - from HTC Corp for $199.99.

The devices will offer mobile broadband speeds up to 10 times faster than 3G.

AT&T is already riding high on Apple Inc. 's ( AAPL ) iPhones (4 and 4S), Google Inc. 's ( GOOG ) Android as well as LTE handsets, which are driving smartphone sales, leading to subscriber accretion and reduced churn. AT&T launched three new BlackBerry smartphones--Bold 9900, Torch 9860 and Curve 936 and three 4G LTE-capable smartphones--HTC Vivid, Samsung Galaxy S II Skyrocket and LG NitroTM HD during the fourth quarter of 2011.

The LTE smartphone portfolio also includes five Android LTE handsets--Pantech Burst, Sony Xperia ion, Samsung Galaxy Note, Samsung Galaxy S II Skyrocket HD, and Samsung Exhilarate, and one Android tablet-Pantech Element. We believe the addition of 4G devices to the portfolio will boost AT&T's competitive position relative to Verizon Communication Inc. ( VZ ).

AT&T has collaborated with Zynga, a popular Web-based social gaming company to offer mobile social gaming options on its Android-based smartphones and tablets. Increased traction of iPhones and 4G LTE devices is expected to enhance post-paid wireless ARPU by 2% this year. Additionally, wireless margins are expected to rebound to the 40% level driven by continued top-line growth, operating efficiencies, new data pricing plans and the new handset upgrade policy.

However, AT&T is lagging its largest rival Verizon in deploying LTE services, which were available to 74 million Americans at year-end 2011. AT&T expects this coverage to double by the end of 2012 and deployment to reach to 80% of the U.S. population by 2013. As of January 23, Verizon deployed 4G LTE services in 195 markets, covering more than 200 million people. Verizon expects to expand its 4G network to its entire nationwide 3G footprint by mid-2013.

Nevertheless, AT&T is way ahead of Sprint Nextel Corp. ( S ), the third-largest U.S. wireless carrier, which is yet to introduce its LTE networks. Sprint expects to enter into the LTE arena by mid-2012.

We prefer to maintain our long-term Neutral recommendation on AT&T. The company retains the Zacks # 3 (Hold) Rank for the short term (1-3 months).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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