“Sprint’s 10-K report, for the fiscal year ending in December, [was] filed this morning,” Tiernan Ray reports for Barron’s. “In that report, Sprint said its sales of Apple’s (AAPL) iPhone will cause its profit in wireless to decline this year, because of a higher average subsidy on the iPhone than for other mobile handsets.”
During 2011, the Company entered into a purchase commitment with Apple, Inc. to purchase a minimum number of smartphones, which on average, is expected to carry a higher subsidy per unit than other smartphones we sell. In addition, during 2012, we expect to make further progress on Network Vision, including certain costs associated with the ongoing decommissioning efforts of the Nextel platform. As a result, we expect that wireless segment earnings will decline in 2012 as compared to 2011 until we benefit from Network Vision, through reduced network and operating costs, and begin to see further increases in retail service revenue through improved total retail postpaid net additions sufficient to recover these increased equipment net subsidy and acquisition costs. – Sprint’s 10-K report, February 27, 2012
Ray reports, “Sprint said it has an obligation to purchase at least $15.5 billion worth of iPhones from Apple under their agreement, and said it expects to purchase more than that.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]