“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.