AT&T Inc. (NYSE: T) said Thursday that it will answer the threat of the soon-to-be-released Verizon Wireless iPhone by launching a raft of new Android devices in 2011 and getting more Windows 7 and BlackBerry devices into the mix too.

How AT&T is preparing for the launch of the Apple Inc. (Nasdaq: AAPL) iPhone on its major rival's network on Feb. 10 was a key concern for analysts on the operator's fourth-quarter earnings call this morning. AT&T has had an exclusive deal with Apple to sell the iPhone in the U.S. since it was first launched in 2007. The operator activated 4 million iPhones this quarter, making a total of around 9 million for the last half of 2010. (See Verizon Finally Gets the iPhone 4 .)

Android vs. iPhone
AT&T CEO Randall Stephenson acknowledged that the launch could make the first half of the year "rocky" and "volatile" for the operator. However, he predicted "healthy contract subscriber growth for 2011" despite the Verizon iPhone, because AT&T will work on revamping its portfolio of devices over the next 12 months.

"We’re bringing Android aggressively into the mix this year," Stephenson said. He also noted that new RIM devices were selling well and said that smart phones based on the new Microsoft Corp. (Nasdaq: MSFT) Windows Phone 7 mobile operating system will also be in the cut.

The network
Stephenson also believes AT&T is starting to put some of its well-publicized network capacity problems behind it. He said that the operator had been waiting for some of its network vendors to clear their backlogs and has since spent the last 45 days "literally bringing capacity on line."

AT&T has been working to push more fiber backhaul links to its cell sites nationwide so that the operator can get more capacity for 3G HSPA+ service and Long Term Evolution (LTE) later on this year. "We’re in the low to mid twenties in terms of deployment currently. We expect to see 65 to 70 percent of our traffic covered by the end of the year," Stephenson said on the call. (See AT&T Says It's Ready for Wireless Growth.)

Overall, the operator is expecting to spend in the "low-to-mid-$19 billion range" on capex this year. This will include increased spending on wireless but a dip in traditional wireline spending. (See AT&T Plans Slight Capex Dip in 2011.)This shouldn't come as a surprise given the forth-quarter numbers. "The fourth quarter represents the first time wireless revenues have surpassed wireline revenues," said CFO Rick Rick Lindner on the call. (See AT&T Reports Record Wireless Net Adds in Q4.)The growing role of tablets
AT&T sold 442,000 iPad and Android tablets in the last three months of 2010. Stephenson was effusive about the growth potential for tablets this year. AT&T will have Android tablets from Motorola Inc. (NYSE: MOT) and others in 2011. The iPad 2 is also expected by many in the industry to launched soon.

"Keep in mind, we’re really early on in the tablet market," Stephenson said, promising more to come in 2011.

The Numbers
Overall, AT&T reported a fourth-quarter profit of $1.1 billion, compared with a 2009 fourth-quarter profit of $2.7 billion. In terms of revenue, the operator recorded $31.4 billion in fourth-quarter sales, up 2.1 percent when compared with the same quarter of 2009.

Wireless provided a mild bright spot in the cloudy numbers with 2.8 million net subscriber additions for the quarter and 7.4 million new "integrated devices" on the network. This translated into 9.9 percent growth in wireless revenues with data revenues up over 27 percent at $1.1 billion.

The new mix-'n'-match approach that AT&T laid out on the call today appears to jibe with some analyst's suggestions of how the operator should advance into 2011. Technology Business Research Inc. (TBR) Analyst Kate Price wrote in a research note on the earnings:

The numbers, however, haven't done anything to allay investor fears about Verizon eating AT&T's lunch with the new iPhone. The operator's stock opened at $28.08 Thursday and was down $0.88, or 3.06 percent, at $27.86 around Noon.

— Dan Jones, Site Editor, Light Reading Mobile