Sprint: Collateral Damage in the Verizon-AT&T iPhone War

So much for Sprint’s tentative comeback. The company’s no longer hemorrhaging subscribers and money like Dan Aykroyd’s exsanguinating Julia Child, as I once joked–at least not as badly as it was. But that could change now that Apple has added Verizon as a second iPhone carrier in the States.

Not only will the Verizon iPhone likely draw new wireless subscribers away from Sprint (and T-Mobile, for that matter), it will boost its churn rate as well. Compounding that effect will be AT&T’s reaction to its loss of iPhone exclusivity and its efforts to hold on to subscribers it fears might defect to Verizon. As Bernstein Research analyst Craig Moffet noted today, AT&T’s not going to stand idly by as Verizon woos away its customers.

“Already in 2Q and 3Q 2010, AT&T partially pre-empted Verizon’s iPhone introduction by upgrading a massive number of its iPhone subscribers, so as to lock them into new 2-year contracts,” Moffet observed in a note to clients today. “This amounts to a massive re-subsidization of existing subscribers, sacrificing margins for subscriber retention. When the actual iPhone introduction at Verizon occurs, AT&T is likely to react further, with more aggressive phone subsidies, incremental advertising, the introduction of other compelling devices, and possibly with price cuts.”

And when it does, Sprint’s share of industry gross additions will inevitably decline.

There’s a wild card here, though: The special event that Sprint has planned for February. If what the company shows off there truly is the industry first it’s promising (and let’s be clear: It’s almost certainly not going to be another CDMA iPhone), perhaps it will indeed make the “impossible possible”–helping Sprint limit subscriber churn in the face of the Verizon iPhone.