As iPhone battle mounts, AT&T holds its ground against Verizon

Analysts, bloggers and other tech prognosticators (ourselves included) thought AT&T’s loss of exclusive iPhone rights might serve as a death knell. But the country’s second largest wireless carrier is still hanging in there against Verizon, despite losing the exclusive agreement with Apple earlier this year. AT&T added 62,000 contract customers during the first quarter, a surprise given that some analysts predicted losses of tens of thousands of contract subscribers with the introduction of the iPhone on Verizon.

AT&T’s network performance has frustrated customers over the years, sparking a belief that iPhone customers would flee as soon as there was an alternative. But that doesn’t appear to be the case in these early stages, with customer churn for the iPhone staying the same as last year, according to AppleInsider.

Furthermore, AT&T said that it activated 3.6 million iPhones during the quarter, up from 2.7 million for the same period last year. In total, the company said that it sold 5.5 million smartphones, up 60 percent.

If AT&T can hold off Verizon for a few more quarters, the tides may turn. The company is in the process of buying Bellevue-based T-Mobile USA for $39 billion, and if the deal goes through it could potentially open up a huge new market of new smartphone customers. (We’ve heard from a few T-Mobile customers who say they are waiting to get the iPhone).

In fact, AT&T CEO Randall Stephenson made another plea in today’s earnings announcement for approval of the T-Mobile deal. (The acquisition is facing intense scrutiny from both federal and state regulators as well as rivals like Sprint).

“Mobile broadband networks are driving unprecedented growth and innovation, and AT&T is playing a leading role in bringing these benefits to customers,” Stephenson said. “That’s why our agreement to acquire T-Mobile USA, which we announced in March, is so important. Combined, the two companies’ spectrum and network assets will allow us to simultaneously address spectrum issues created by this increased demand and improve customers’ network experience as volumes continue to grow.”

Full earnings release from AT&T here.

John Cook is co-founder of GeekWire. Follow on Twitter: @geekwirenews and Facebook.