The rumors that Verizon will release the iPhone in January 2011 have led to remarkable fall in the shares of AT&T and the analysts are now saying that AT&T is a better buy than rival Verizon. If Apple decides to move iPhone on Verizon then the carrier will definitely steal customers from AT&T and other carriers.

According to some analysts it is not the right time to buy Verizon’s stock because its stock is overvalued, as markets are yet to factor in earnings hit from the carrier’s sale of some rural landlines.

On the other hand, AT&T’s shares are undervalued and some analysts argued that that the fears of a mass switching of AT&T customers to Verizon are overblown. Notably, many iPhone customers are locked into two-year contracts with AT&T. “Going into the second-quarter report, we like AT&T better than Verizon,” said Wells Fargo analyst Jennifer Fritzsche.

Fritzsche stressed that it is likely that AT&T would retain more iPhone customers than people think. She added that the carrier would also earn higher profit margins than Verizon because it has several big business customers under its belt.

Besides this, AT&T’s full ownership will also help it to retain its business. Verizon owns a 55 percent share in its Verizon Wireless venture with Vodafone Group Plc. “Relative to AT&T, it’s more expensive. I don’t think it should be. They’re similar businesses, except AT&T owns the whole of its wireless business,” Hudson Square analyst Todd Rethemeier said of Verizon. AT&T shares have fallen almost 7% in the last few months largely due to the fear that the carrier will lose its exclusivity for the iPhone.