Sprint Corporation (S - Free Report) in collaboration with LG Electronics USA announced that it will launch of Google’s (GOOG - Free Report) Nexus 5 on its network on Nov. 8. The device will be available for $149.99 for the 16GB version after a rebate of $50.00. We believe that the new addition to Sprint’s product portfolio will add to its service revenues and accelerate the demand for 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 92% of Sprint’s post-paid sales in the third quarter. Recently, the company also announced that it will offer Samsung Galaxy Mega on its network attracting customers to its 4G services. Sprint also activated over 1.4 million Apple Inc. (AAPL - Free Report) iPhones in the third quarter, 40% of which belong to new customers.
Over the long term, the company expects iPhone to generate $7–$8 billion in profits with the inclusion of 1–1.2 billion gross subscribers $6–$6.8 billion in profitability. Overall, the company sold around 5 million smartphones in the third quarter. 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.
Inaddition to smartphones and other equipment, the company is also focusing on improving its service plans with value added data plans that can accelerate post-paid wireless subscriber growth and average revenue per user (ARPU) with an improving churn rate. With regard to prepaid, Sprint’s multi-brand like 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 contributing significantly to the company’s subscriber growth. Additionally, the company started offering the popular iPhone through its no-contract prepaid Virgin Mobile brand and WiMAX service via both prepaid Virgin and Boost Mobile. The company also offers Unlimited Guarantee plan for unlimited data at $30 a month on smartphones and $10 per month on other phones including voice and text service at $50 on first connection.
In the third quarter, Sprint registered a surge in its service revenues thanks to the introduction of new pricing plans such as Unlimited, My Way and My All-In plans that include unlimited talk, text and data while on the Sprint network. In addition, the company has also gained from its smartphone upgrade plan, Sprint One Up, which offers unlimited talk, text and data along with smartphone upgrade in every 12 months.
Sprint, which operates with mega telecom companies like Verizon Communications Inc. (VZ - Free Report) , has a Zacks Rank #3 (Hold).