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Above: Sprint CEO Dan Hesse
For Sprint, the iPhone could be its savior, or its doom. The company has arranged to buy at least 30.5 million iPhones over the next four years, a deal worth around $20 billion today, the Wall Street Journal reports.
Such a bold move could be worth it if the iPhone finds success on Sprint’s network and attracts more subscribers, as it has on Verizon and AT&T. But if Sprint can’t sell all of the iPhones it has agreed to purchase, the deal could spell disaster for the No. 3 U.S. carrier.
“This is a bet-the-company kind of thing,” a person familiar with the news told the WSJ.
Even if Sprint manages to find buyers for all of its iPhones, it will still have to subsidize every unit by $500 to offer them at the low prices consumers expect. It will take a while for Sprint to recover that cost, the WSJ says, despite the expensive subscription plans that iPhone users adopt.
Apple is holding an event tomorrow to unveil its new iPhone, and it has been expected for some time that Sprint will finally get the smartphone for its network. But a deal of this magnitude comes as a surprise, and it solidifies the fact that carriers need the iPhone more than Apple needs the carriers.
Sprint had some 52 million subscribers at the end of the second quarter this year. In comparison, Verizon has around 106 million subscribers and AT&T has around 99 million.
As a crazy addendum to this news, the mobile site Boy Genius Report says that the $20 billion deal might have landed Sprint an exclusive with the iPhone 5. A source tells BGR that Sprint will be the only carrier to get the iPhone 5 tomorrow, while both Verizon and AT&T will get slightly souped-up iPhone 4S models. In that scenario, both AT&T and Verizon will get LTE iPhone 5 models early next year. Sound crazy? I’m right there with you.