Sprint Committed to $15.5B iPhone Contract in 2011
By on February 28th, 2012

Earlier this month, Sprint revealed that it sold 1.8 million iPhones in the fourth quarter of 2011. Now according to Sprint’s 10-K report for the 2011 fiscal year, the carrier revealed that it is betting on subscriber dues to offset an expected 2012 deficit agreement with Apple. Apparently, this called for a minimum order of around $15.5 billion worth of iPhones, according to Barron’s.

What’s interesting is that even though the carrier saw a decline in wireless profits due to the high subsidy cost of carrying the iPhone, the carrier still agreed to purchase $15.5 billion worth of iPhones. By doing so, Sprint looks to make up for the profit loss with the subscriber revenue.

Carriers pay large subsidies to carry the iPhone, and Sprint is currently paying $450 for every unit sold with a two-year contract. In addition to this, the carrier offers “instant savings” by offering unlimited data for any iPhone model. The carrier plans to take a hit in profits early by purchasing and subsidizing the iPhone. Even though this might sound crazy, there might be evidence that their strategy maybe working because last quarter the carrier sold 1.8 million iPhones.

 

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Author: Parth Dhebar
Parth Dhebar is a 18 year-old entrepreneur. He is the founder of Simple Reviews, a blog focused on reviewing iPhone and iPad applications. Parth is a recognized name in the industry, known for covering Apple news. He is an editor at Techie-Buzz covering news on Apple. You can follow him on Twitter @pdparticle.

Parth Dhebar has written and can be contacted at parth@techie-buzz.com.

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