Fight for iPhone users hurts AT&T

AT&T lowered its revenue outlook for the year amid a bitter price war for iPhone users and lacklustre take-up of a new service plan that asks customers to meet the full cost of their new devices.

The second-largest US mobile carrier, which also narrowly missed earnings expectations, said revenue growth would be between 3 and 4 percent in 2014, down from a previous forecast of 5 percent. The US wireless market has become increasingly competitive in recent months as Sprint and T-Mobile, the two smallest carriers, seek to steal market share from the “Big Two”, Verizon and AT&T, with generous deals for data-hungry iPhone customers.

AT&T said fewer people than expected signed up for its “Next” plan, which asks the customer to pay the “sticker price” for a new handset and allows the company to book revenue from the device sale immediately. There was also a spike in the number of customers connecting their own, pre-existing devices to AT&T’s network instead of buying a new handset from the carrier. Craig Moffett, an analyst at Moffett Nathanson, warned that customers were experiencing a “sticker shock” upon being asked to meet the entire cost of a new handset.