Sprint filing reiterates huge price paid for the Apple iPhone, big profit still expected

Sprint filing reiterates huge price paid for the Apple iPhone, big profit still expected
To join AT&T and Verizon in the the business of selling the Apple iPhone, Sprint had to sign a pact with Apple that promised that the nation's third largest carrier would buy $15.5 billion of the device over four years. the company announced this last October and the figures were re;peated in the carrier's 2011 10-K filing with the FTC. The financial burden on Sprint is high considering it offers as much as a $450 subsidiary on an $850 64GB variant of the Apple iPhone 4S. Sprint has said that it is paying Apple $200 more than other carriers for each iPhone

During the holiday quarter, Sprint picked up 640,000 new iPhone customers and sold 1.8 million units of the device. This means that with each new customer paying $70 to $120 per month, Sprint will have picked up an additional $1 billion in revenues. That doesn't include current Sprint customers who updated to Apple's touchscreen phone. Sprint is drawing new customers for the iPhone because it is the only one of the major carriers offering unlimited data. This attracts heavy data users who have found themselves paying overages or having their data speed throttled to 2G speed during times of heavy tower congestion. So even at $80 per month, there are customers who would prefer to use the Apple iPhone on Sprint. And as more and more customers find themselves getting throttled ( in more ways than one) by the major carriers, more and more iPhone users might jump to Sprint.

But wait! A report last month quoted Sprint CEO Dan Hesse as saying that 1% of Sprint's users are throttled. Well, that still leaves unlimited data for the 2%-5% of Sprint customers that might be suffering through slower data speeds on other carriers.

Sprint's deal with Apple is expected to bleed $1.2 billion of red ink this year, by next year the deal should start to turn profitable and Sprint will be firmly in the black at the end of the four year deal in 2015. While the subsidies on the device are triple what Sprint had been paying, the retention of iPhone users, the ability to draw new customers and the profitable data plans will make committing to the Apple iPhone a very good decision for Sprint. Previously Sprint said that as the contract expires, it expects to make the equivalent of $7-8 billion in 2011 dollars. We leave you with the words of Sprint CEO Dan Hesse who says, "iPhone has an expensive contract, but is worth every penny."

source: electronista

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11 Comments

1. KickRocks

Posts: 279; Member since: Mar 22, 2011

Nothing good ever comes from selling your soul to the devil!

2. Gawain

Posts: 441; Member since: Apr 15, 2010

I seriously doubt that Apple is giving VZW and AT&T a break of up to $200 per device. Sprint is losing money on this proposition because they aren't recovering it in subscriber fees, because they are trying to be a "lower cost" competitor (which has been hampering revenues)...so I see plenty of revenue to Sprint, but I can't help but think there will be plenty of red ink as well...

3. tward291

Posts: 559; Member since: Feb 14, 2012

time will tell if this was a good choice

4. gallitoking

Posts: 4721; Member since: May 17, 2011

is very simple.. want to survive in the mobile world.. offer the iphone.. period... or be like T-mo.. in last place amongst major carriers. and is staying there.. no iphone and no LTE... wow..

5. cncrim

Posts: 1588; Member since: Aug 15, 2011

How are you explain us Cellular doing so well without iphone? If I recall it right Apple want iphone onUS Cellular.

6. gallitoking

Posts: 4721; Member since: May 17, 2011

I said major carriers,.. US Cellular will never be in the major carriers conversation...

8. cncrim

Posts: 1588; Member since: Aug 15, 2011

So your argument is pointless and you are admitting you stay correct iphone isn't the big gun like you claim or many other said like it could be.

9. gallitoking

Posts: 4721; Member since: May 17, 2011

well thats is your opinion.. the fact is that US cellular doesnt want the iphone.. is they cant afford it.. and uS Cellular wil never have subscriber number that even last place T-Mo has.. I dont need to claim anything.. iphone biggest phone seller of 2011.. thats speak for it self...

7. tward291

Posts: 559; Member since: Feb 14, 2012

man sprint to a load in the mouth to play with apple lol i guess it time for tmobile to drop them trousers and touch them ankles to get the iphone. you would think apple would use lobe before they i fck these companies

10. vvelez5

Posts: 623; Member since: Jan 29, 2011

Every product has to plateau. Those numbers are if people continue to pursue an iPhone and as we see there is strong competition coming from several OS'. Of course only time will tell but this is a very risky move by Sprint. And if it works for Sprint this would be a great move by Dan Hesse.

11. TechnoTechyes

Posts: 71; Member since: Jan 24, 2011

I thought the throttling had to do with roaming. My friend just called me yesterday and told me how he has no service with Verizon, but his Sprint roaming is working fine. Who cares about throttling, when the other choices are always worse.

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