The Mobile Internet Report Key Themes*

Scenario: AT&T Loses iPhone Exclusivity to Verizon Part III
AT&T activated 7.2MM iPhones in the first nine months of C2009 (shaded area on bottom
right chart), which are likely on two-year contracts / are unable to immediately churn away
free of charge if / when Verizon were to begin selling the iPhone in June C2010E.
We estimate AT&T has an installed base of ~11.9MM iPhone subscribers, of which 61% were
added in C2009.
AT&T iPhone Subscribers & % of Postpaid Base
AT&T iPhone Activations, 2Q07 – 3Q09
AT&T's iPhone Subscribers (MM)
16
12
8
4
0%
2%
6%
14%
12%
9% 10%
17%
15%
2Q07 4Q07 2Q08 4Q08 2Q09
ESTIMATED iPHONE SUBS (000s)
iPHONE % POSTPAID BASE
19%
20%
16%
12%
8%
4%
0%
iPhone as % of Postpaid Base
iPhone Activations (000)
4,000
3,000
2,000
1,000
000
‘In contract’
customers by 6/10
1,119
2,315
1,440
688
2,400
1,900
1,600
2,400
2Q07 4Q07 2Q08 4Q08 2Q09
iPhone Activations (000s)
3,200
Source: Simon Flannery, Morgan Stanley Research.
550