Sprint Strains Finances With New iPhone
NEW YORK (AP) — NEW YORK (AP) — Sprint subscribers will be able to use the iPhone for the first time, giving them one more reason to stay with the ailing company. But the phone will come at a heavy price for the company.
When revealing the new iPhone model, the 4S, Apple Inc. said Tuesday that Sprint will be among the carriers to sell it, starting Oct. 14.
Sprint Nextel Corp., the No. 3 wireless carrier in the U.S., has had a hard time hanging on to customers, while AT&T and Verizon, the two larger ones, have been luring people with the iPhone.
Sprint didn't reveal Tuesday if it would sell the cheaper iPhone 4 as well. It also didn't reveal if it would apply its existing smartphone plans, or modify them for the iPhone. Its current smartphone plans provide for unlimited data, while AT&T and Verizon cap theirs.
Being able to sell the coveted phone should help Sprint keep customers, but it will pay for the privilege. Like other carriers, Sprint will buy the phones for about $600 each, then sell them to customers for $199. That will put added strain on its already weak finances.
On Monday, The Wall Street Journal said that Sprint has committed to buying more than 30 million iPhones over the next four years. It cited unnamed people familiar with the matter. Apple and Sprint didn't comment on the report.
The Journal said CEO Dan Hesse had told Sprint's board that the company would lose money on the deal until 2014. Sprint has already posted a loss for every quarter since 2007.
Sprint's stock fell 10 percent on the report and briefly hit a three-year low of $2.25 in morning trading. After Apple's announcement, Sprint's stock closed at $2.86 for the day, up 4.8 percent.
Sprint, which is based in Overland Park, Kan., has 33 million subscribers on contract-based plans, so its reported commitment means it would have to convert half of them to iPhones, assuming they upgrade after two years.