iPhone 5 Release Date: Finally on Sprint? Network Won't See Profits Until 2014
Wireless network Sprint has reportedly struck an exclusive deal with Apple to carry the iPhone. However, details indicate that the deal will cause Sprint to lose money until 2014.
Wall Street Journal reports that Sprint has agreed to buy 30.5 million iPhones over the next four years, paying $20 billion for the bundle, at current rates, regardless of whether the phones sell or not.
Commentators say that the deal is more of a gamble than an agreement, as the network stands to see a loss of approximately $1.5 billion until 2014.
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"This is a bet-the-company kind of thing,'' a source familiar with Sprint's decision-making told WSJ.
The source detailed that Sprint's already "staggering" income may not be able to handle the venture.
According to WSJ, Sprint’s stock has dropped more than 80 percent since the introduction of the iPhone in June 2007.
Commentators do not expect that Sprint will be able to sell 30.5 million iPhones within four years, noting that even popular iPhone carriers AT&T and Verizon have collectively sold 12 million iPhones in the first half.
However, Sprint's plans to subsidize the phone, in conjunction with its unlimited data plan might help the network capture the third of the U.S. sales it would need to catch up with AT&T and Verizon.
Rumors that Sprint would be carrying the iPhone 5 have been circling for months, however the company has mostly kept quiet about the iPhone.
As one of the most popular wireless networks in the U.S., Sprint Chief Executive Dan Hesse has admitted that the carrier has suffered from not carrying the iPhone.
"The lack of the iPhone is "the No. 1 reason customers leave or switch," Hesse stated at a recent industry conference.
Speculations have indicated that Sprint has recently updated its smartphone termination fee to $350 and decreased its return window policy from 30 days to 14 days, seemingly preparing for a major phone release.
Other Sprint officials however, have refused to comment on "rumors and speculation."
