For some, yes, the distractions available on a smartphone mean they read less--but as already noted, these people were unlikely to be big readers in the first place. People who love reading are still reading despite phones.
And because of phones. My two daughters read voraciously, one on a daily commute using Audible through her cell phone, the other on her phone while her husband watches TV next to her. I don't think either of them buys physical books any more, but they're both reading as much as ever, maybe even more.