Sprint Corporation (S - Analyst Report) recently announced that it will offer Apple Inc.’s iPhone (AAPL - Analyst Report) starting Sep 20. The company will be offering iPhone 5S with a price tag of $199 for the 16GB model, $299 for the 32GB model and $399 for the 64GB model.
In addition, iPhone 5C will be offered at $99 and $199 for the 16GB and 32GB models, respectively. We believe Sprint’s latest iPhone offering not only supports increased market traction but also backs the growing popularity of its LTE services.
Sprint has a rich collection of smartphones including Android, tablets, USB modems, hotspots and routers, all of which are performing well in the market. Smartphones represented 86% of Sprint’s post-paid sales. In Jun 2013, the company launched 4G LTE-based Windows Phone 8 Smartphones – HTC 8XT and Samsung ATIV S Neo under a two-year contract plan.
Recently, the company also announced that it will offer Samsung Galaxy Mega on its network, attracting customers for its 4G services. Moreover, Sprint also activated over 1.4 million iPhones in the second quarter, 41% of which belong to new customers.
Over the long term, the company expects iPhone to generate $7–$8 billion in profits with the addition of 1–1.2 billion gross subscribers adding $6–$6.8 billion in profitability. Overall, the company sold around 5 million smartphones in the second quarter. In addition, the company also introduced its tri-band LTE data device that uses LTE on 800 megahertz, 1,900 megahertz and 2.5 gigahertz. The device will be available for sale in late 2013.
Further, Sprint in collaboration with U.S. based IT and telecom infrastructure provider, A&T Systems has received a mobile services contract from the U.S. Department of Veterans Affairs under which it will now offer an array of wireless devices. We believe continued growth in smartphone penetration will foster ARPU improvement on the Sprint platform as well as result in lower churn rates given the contract package that is sold along with these smartphones.
Sprint is also offering competitive data plans to generate market traction. The company is increasing penetration of its $10 data premium plan leading to post-paid wireless subscriber growth and average revenue per user (ARPU) with improving churn rates. With regard to prepaid, Sprint’s multiple brands such as Boost Mobile, Assurance Wireless and Virgin Mobile as well as innovative offers like $50 monthly unlimited plan with Shrinkage, Beyond Talk plans and Broadband2Go are making significant contribution to the company’s subscriber growth.
However, last week, AT&T Inc. (T - Analyst Report) also announced that it will launch both the new models of iPhone on the same date as Sprint, thereby resulting in increased market competitiveness. But we believe that with the renewed financial strength that Sprint gained from its merger with SoftBank, the company remains well positioned to establish its market position against the likes of AT&T and Verzion Communications Inc. (VZ - Analyst Report) .
Sprint currently has a Zacks Rank #3 (Hold).