If iPhone devices lose any favor among the general public or if Sprint users gravitate towards other carriers it could spell doom for the wireless carrier. That’s because Sprint has revealed an agreement to purchase $15.5 billion in iPhone devices over a four year period.
The huge device buy was revealed in the company’s 2011 10-K filing with the FTC and in that filing Sprint says it will likely leave 2012 with a deficit, largely due to the company’s huge expenses which includes subsidizing the 64GB iPhone 4S by up to $450 per device.
While the strategy is most certainly risky Sprint is already showing positive effects from the agreement with 640,000 new iPhone subscribers already signed onto the network. During the holiday shopping season Sprint claimed 40 percent of new subscriber iPhone sales nationwide while selling 1.8 million iPhone devices overall.
With each sale collecting between $70 and $120 per month for at least 24 months the company has already earned upwards of $1 billion in revenue. That number doesn’t include existing Sprint subscribers who signed new contracts to get their hands on a Sprint powered iPhone.
The company is now hoping that it’s truly “unlimited” data plan will draw in customers sick of data caps put in place by AT&T, Verizon, Sprint and other smaller regional carriers.
Sprint’s financial filing shows a $1.3 billion deficit in 2012 with increased margins predicted in 2013 and a profit on the books by the end of Apple’s four-year agreement with the company.
Sprint is also hoping that it’s iPhone agreement will help increase retention rates for the carrier.
Do you think the iPhone line of devices can help save Sprint in the long-run?