“Sprint Nextel Corp. was punished by investors two weeks ago for revealing too little information about the cost of the iPhone,” Greg Bensinger reports for Dow Jones Newswires. “On Wednesday, the nation’s third-largest wireless provider switched tactics during its third-quarter earnings report and released a flurry of data on its funding needs. Investors didn’t like that either.”
“The carrier said its deal with Apple Inc. will cost it at least $15.5 billion over four years, meaning it likely won’t turn a profit on the device before 2015. While Sprint expects iPhone customers ultimately to be more profitable than those using other smartphones, the cost to bring them aboard will be 40% higher,” Bensinger reports. “Shares of Sprint fell 4.4% recently to $2.58.”
“Sprint said it faces a cash shortfall of up to $2.2 billion next year and $5.2 billion in 2013 as it buys millions of iPhones and spends about $5 billion to upgrade its network to a fourth-generation standard similar to that used by rivals AT&T Inc and Verizon Wireless,” Bensinger reports. “‘There has never been a point in time since I was here that I didn’t want to carry the iPhone,’ said Dan Hesse, who joined Sprint as CEO in December 2007. ‘I was very pleased when Apple decided that they would very much like Sprint to carry the iPhone.'”
Bensinger reports, “The carrier expects to benefit by as much as $8 billion over the life of its arrangement with Apple, in part because iPhone customers are worth 50% more than average smartphone users, Hesse said. However, Sprint will pay dearly in the short term–about $200 more per device than competitive smartphones.”
Read more in the full article here.
“….$200 more per device than competitive smartphones.”
What smartphone competes with an iPhone? Sprint pays more for this premium product because that’s how capitalism works. It costs money to make money. Their customers would’ve gone elsewhere had Sprint not contracted to carry this device. Thus in the long run, they’d have lost more money than they won’t make in the short run by having the iPhone.
Agree! Sprint was investing in its long-term survival in a cutthroat world. Investors should find a cure for their myopia & support Sprint. I, for one, am considering a switch to Sprint.
O2012
What is your evidence that Sprint pays more than other carriers for the iPhone?
I didn’t allege that Sprint pays more than other carriers for the iPhone. The article’s final paragraph supports my assertion that Sprint will pay more for the iPhone than for other smart phones:
Bensinger reports, “The carrier expects to benefit by as much as $8 billion over the life of its arrangement with Apple, in part because iPhone customers are worth 50% more than average smartphone users, Hesse said. However, Sprint will pay dearly in the short term–about $200 more per device than competitive smartphones.”
if Sprint can combine the iPhone with superior customer service and some kinda special discount for texting/data service, they will succeed in a way that AT&T and Verizon have failed to do. They can win accounts from their customer base.
In my experience, Sprint has nothing resembling customer service.
then they will fail to take customers from AT&T and Verizon, my point.
Our family of 6 are new Sprint customers. We’re in four cities in the Midwest, and so far service has been excellent. Our local store went out of its way to get us phones (6 iPhone 4S) and put us on a single family plan, which saves a bunch over a year’s time. Network service has been better than AT&T for both voice and data. So far, so good.
“…$200 more per device than competitive smartphones.”
Please define ‘competitive’.
They will not, so I will try instead: slow, copycat UI Android creaky plastic device with the ugly bump of thickness on one of the edges.
“in part because iPhone customers are worth 50% more than average smartphone users”
I’m offended… I am definitely worth more than 50% of the average “dumbphone” user… Android? Blackberry? Windblows?… Those are “smartphone” users?
Sufferers…
Sprints network is pretty bad(slow 3G speeds compared to AT&T or tmobile), they pushed the wrong 4g standard.
Sprint is definitely in trouble.
Sprint has a 67 page forum concerning complaints about slow data speeds. Unlimited data but it slows to a crawl.
Essentially, Sprint is committed to 6M iPhones a year for 4 years.
The important thing is this: carriers should no longer have a monopoly, if users (the people clicking “pay” on carrier websites) have choices, the lazy-ass bastards will have to start competing
vis a vis: $20 effin dollars a month for texting, et al