AT&T’s iPhone Sales Slow, But Just You Wait Until the Fourth Quarter

AT&T said it expects to see the best smartphone sales ever in Q4, driven by the latest iPhone and the launch of its first true 4G phones.

During AT&T’s third-quarter conference call this morning, mobile chief Ralph de la Vega said that despite a dip in the number of Apple iPhones activated in the latest quarter, the holiday season is shaping up to be one of the company’s strongest smartphone quarters ever.

Here’s what is driving the fourth quarter: For the first time, AT&T is offering an iPhone — the 3GS — for free with a two-year contract; the iPhone 4S is turning out to be the strongest launch ever, with more than one million activated as of Tuesday; it is also launching its first LTE devices; and generally strong holiday sales are expected.

AT&T is late in rolling out its 4G network on the LTE standard, compared to its next-closest competitor, Verizon Wireless, which blankets many of the major cities in the U.S. So even though the devices will be available, the network will be spotty.

“I’ve been a part of many network and device transformations, and this technology is the best I’ve ever seen. The devices are fast and thin and have great battery life,” de la Vega said. “What I see happening with LTE and data is a huge growth opportunity. We mentioned that 52 percent of our post-paid base … In the future, you could look at 100 percent penetration, not two-thirds of our sales, like we are seeing today.”

AT&T said that by the end of the year it will cover 15 cities, representing 70 million people. The next two markets to be built out will be Boston and Washington, D.C. The company previously said it had launched in Atlanta, Chicago, Dallas, Houston and San Antonio.

To date, the wireless carrier had only been selling data devices for the network, such as a data stick and a mobile hotspot.