The analyst estimates that, if AT&T's 40% margin expansion and earnings guidance is achieved, the firm's wireline margins could be around 30% in 2009. "That's far worse than even our already below-consensus estimate of 33.7%," he added. "Their 40% guidance for wireless is, however, significantly better than our forecast." Despite its modest revenue rise, AT&T's fourth-quarter profits felt the impact of its iPhone subsidy program, suggesting that the smartphone is still something of a double-edged sword for the telecom giant. "The iPhone short-term margin pressure is just that: It's short-term," said AT&T CEO Randall Stephenson during the conference call, alluding to the service fees that his firm will receive from iPhone users. Although iPhones took a 5-cent bite out of the telecom bellwether's earnings, this was much less than their 10-cent impact during the third quarter. Clearly looking to the future, Stephenson described AT&T's service provider agreement with Apple for the iPhone 3G as the company's most important move in 2008. "In the last six months, we activated more than four million customers," he said, adding that AT&T's wireless business is growing at a double-digit rate. iPhones also offer an average retail price unit 1.6 times higher than the company's traditional postpaid products, added Rick Linder, the AT&T CFO. Both Verizon and AT&T are enjoying strong wireless numbers, with the latter growing its wireless business 13.2% to reach $12.9 billion in the fourth quarter. Boosted by iPhone 3G deployments, AT&T also added 2.1 million subscribers to reach a total customer base of 77 million, 7 million more than the same period last year.