AT&T seen getting an iPhone boost

WASHINGTON (MarketWatch) - When AT&T Inc. reports third-quarter earnings next week, the nation's largest phone company is expected to show strong growth in its wireless business, fueled by sales of the Apple iPhone.
The July-to-September period represents the first full quarter of iPhone sales. The device only became available exclusively from AT&T in the last two days of the second quarter, when 146,000 subscribers activated an iPhone plan.
Since then, Apple Inc. has said more than 1 million iPhones have been sold.
In the third quarter, AT&T is projected to earn 71 cents a share, excluding onetime costs and benefits, or 52 cents a share on a net basis, according to the consensus of analysts surveyed by Thomson Financial. Revenue is seen reaching $30.12 billion.
AT&T (T:















41.81, -0.12, -0.3%) is slated to issue results on Tuesday morning.
Bear Stearns predicts AT&T will gain a net 1.88 million wireless customers in the third quarter, with Verizon Wireless trailing at an expected 1.62 million. The brokerage said AT&T and Verizon would especially benefit from weakness at Sprint Nextel Corp. (S:
















17.62, -0.10, -0.6%)
Sprint has already said it would lose 337,000 net postpaid customers, putting its losses in that category at more than 1.03 million over the past five quarters. Postpaid subscribers sign up for annual plans and pay at the end of each month. They are considered the most valuable in the industry.
Just a few weeks ago, Bearn Stearns and other brokerages were estimating that AT&T would gain 1.5 million or fewer wireless customers, but most firms have raised their estimates in expectation of higher iPhone shipments. Apple sharply cut the price of the iPhone in early September.
Bear Stearns said about 40% of iPhone buyers are new customers, many of whom came from other mobile carriers. The rest are current AT&T users who upgraded to the iPhone, the brokerage said.
AT&T is the nation's top mobile carrier in terms of subscribers, with 63.7 million at the end of the second quarter. Yet Verizon Wireless, the joint venture of Verizon Communications Inc. (VZ:















44.97, -0.29, -0.6%) and Vodafone Group
PLC (VOD:















36.01, +0.05, +0.1%) , generates more revenue from its wireless
business.
The iPhone and wireless aside, investors are expected to focus on growth in AT&T's high-speed Internet and fledgling fiber-television segments. They also hope to see improved trends in the company's local-phone division and corporate-services unit.
For the third quarter, AT&T is forecast to add more than 70,000 customers to its TV service, called U-Verse. The service has more than 100,000 customers and AT&T is rolling it out quickly, but the company faces huge competitors in the cable and satellite industries.
Over the past months the market has been rife with speculation that AT&T might acquire a satellite-TV business - Echostar Communications Inc. or DirecTV - to jumpstart its entry into the television business.
AT&T is making a push into the video market to counter the cable industry's move into the phone business. Every quarter AT&T is losing local-phone customers to cable companies that operate in its territory.
Investors would like to see line losses begin to slow. AT&T could see a 4.1% decline year over year in the number of residential lines in service, BMO Capital Markets forecast.
In the high-speed market, AT&T could add between 400,000 and 500,000 customers, Wall Street firms predict.
Jeffry Bartash is a reporter for MarketWatch in Washington.
Link