Although Apple is poised to unveil the long-awaited iPhone 5 this morning, all eyes are shifting back and forth between Apple and Sprint, as the nation’s third largest carrier has been rumored for months as the next major operator in the United States to carry the popular smartphone.
According to a report this week from the Wall Street Journal, Sprint is taking an enormous gamble with regard to the iPhone as it aims to better compete with AT&T and Verizon.
Based on what sources tell the WSJ, Sprint is poised to “bet the company” on the iPhone.
The No. 3 wireless company is making a multibillion dollar gamble that Apple Inc.’s gadget will be the ticket to a turnaround, even though Sprint Chief Executive Dan Hesse told the board in August that Sprint would likely lose money on the deal until 2014, according to people familiar with the matter.
Sprint has allegedly agreed to purchase more than 30 million iPhones from Apple over the next four years at an estimated total cost of $20 billion.
Sprint’s “staggering” investment is so large, in fact, that the carrier is expecting to effectively lose money on the deal until 2014 at the very earliest.
“In order to keep the price people pay for the phone low and competitive with rivals,” the WSJ reports, “Sprint would be subsidizing the cost of each phone to the tune of about $500, which would take a long time to recoup even at the high monthly fees iPhone users pay.”
For Sprint, however, the gamble may ultimately prove worthwhile, as the continued lack of the iPhone on its network remains “the No. 1 reason customers leave” Sprint.