Sprint 'Betting the Company' on the iPhone

Carrier needs roster addition, but it's going to cost a fortune
By Kevin Spak,  Newser Staff
Posted Oct 4, 2011 11:05 AM CDT

(Newser) – Sprint may or may not be the exclusive carrier of the iPhone 5 until sometime in early 2012—but it’s betting massively that just adding Apple's beloved smartphone to its roster will be its salvation. Sprint has committed to buy 30.5 million iPhones over the next four years, at a cost of $20 billion, the Wall Street Journal reports. To sell all those phones, it’ll have to either double its subscriber base, shift all its existing customers to the iPhone, or some combination of the two.

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And even if Sprint manages to double its subscribers, the deal still won’t pay off until 2014, because it’ll only pass $200 of the phone’s cost on to customers. “This is a bet-the-company kind of thing,” a Sprint insider says, calling the projected hit to the company’s operating income “staggering.” Investors seem wary of that gamble; Sprint shares fell 10% in after-hours trading when the terms of the deal broke yesterday. (Read more Sprint stories.)

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