updated 08:40 am EDT, Wed October 26, 2011
Sprint reports last quarter before iPhone deal
Sprint touted better results for the summer quarter, its last before it picked up the iPhone 4S. Although it lost $301 million, the loss was much less than both $847 million in the spring and the $911 million of a year ago. It also added 1.3 million total new customers, 304,000 of which were its core subscription customers.
It also pointed to its average revenue per person went up about $3 per person, reflecting a longer-term shift to smartphones.
The carrier expected to turn a corner with the iPhone. Along with easily breaking single-day sales records, pushing past Android devices within just four hours, Apple's hardware is expected to be an accretive value that improves Sprint's finances over time. iPhone owners should be "among Sprint's most profitable" subscribers, the network said.
The cost to get an iPhone customer is about 40 percent higher than Sprint's usual, but the deal, now known to last for four years, should ultimately be positive by about 2014 and add $500 million. iPhone customers are expected to have about a 20 percent higher margin than other subscribers, since they're more likely to spend on data.
Accordingly, Sprint said it had managed to boost the size of its revolving credit facility by $150 million to give it $2.24 billion. The move lets it once again include subsidies for devices like the iPhone in its earnings. Apple would also contribute both to reduced turnover from customers trying to leave as well as better use of the network than Android. iPhones are "quite efficient" compared to Google's platform, Sprint said during its results call.
Sprint hasn't said how many iPhones it has activated so far, but it's known to have had similarly long lines as at AT&T and Verizon stores. The gross addition percentage was "significantly higher" in the first two weeks than for the previously record-setting Evo 4G, CEO Dan Hesse said.