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AT&T Inc. (T - Analyst Report), the second-largest U.S. mobile service provider, will roll out Google Inc.’s 4G LTE Android based Xperia Ion smartphone, effective June 24.

AT&T will be the first carrier to market Xperia Ion, Sony Corporation’s (SNE - Snapshot Report) first-ever 4G LTE smartphone, in the U.S. market. The smartphone will be available at $99.99 per month with a two-year agreement.

In addition to Xperia Ion, AT&T added two Microsoft Corporation (MSFT - Analyst Report) Windows Phone — Nokia Corporation’s (NOK - Analyst Report) Lumia 900 and HTC One X, three Android smartphones — Pantech Burst, Samsung Galaxy Note and Samsung Exhilarate, and one Android tablet — Pantech Element in the first half of this year.

We believe the addition of 4G devices to AT&T’s portfolio will boost its competitive position against its major rivals Verizon Communications Inc. (VZ - Analyst Report) and Sprint Nextel Corp. (S - Analyst Report). AT&T is riding high on iPhones, Android as well as LTE handsets that are further driving smartphone sales, leading to subscriber accretion, reducing churn and, in turn, higher wireless revenue.

AT&T is lagging its largest rival Verizon in deploying LTE services, which currently cover 74 million Americans. The company expects this number to double by the end of this year and deployment to reach to 80% of the U.S. population by next year. Further, AT&T plans to introduce LTE in 12 more markets by this summer. This will take the number of AT&T’s markets to 40 from the current 28.

Verizon has deployed 4G LTE services in 203 markets, covering more than 200 million people. The company expects to expand its 4G networks to 400 markets by the end of this year and the entire nationwide 3G footprint by mid-2013.

However, AT&T is way ahead of Sprint, the third-largest U.S. wireless carrier, which is yet to introduce its LTE networks. Sprint plans to launch its own LTE networks in mid-2012 and expects to complete deployment by year-end 2013. Initially, LTE services will be deployed in six markets including Atlanta, Baltimore, Dallas, Houston, Kansas City and San Antonio.

We are maintaining our long-term Neutral recommendation on AT&T. The company retains the Zacks # 3 (Hold) Rank for the short term (1–3 months).

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