Sprint is said to be launching iPhone 5 in mid-October and it would come as a 3G phone.

The Wall Street Journal reported that Sprint will begin selling the iPhone 5 in mid-October. According to people familiar with the matter, the new iPhone will be similar to the iPhone 4, but thinner and lighter with an improved digital camera and a new more sophisticated operating system.

Later, a Wall Street analyst said the phone will be 3G-compatible not 4G.

From recent discussions with industry contacts, we believe Sprint and Apple are moving forward toward a launch of the iPhone 5 concurrent with the refresh that next occurs with AT&T and Verizon. We believe this phone would be 3G, but not 4G, capable, RBC Capital Markets analyst Jonathan Atkin wrote in a note to clients.

Sprint's weak second-quarter financial results have shifted investor focus from positive momentum in net additions to EBITDA under performance.

Recall that management reiterated FY11 EBITDA guidance on the 2Q11 conference call and while management did not explicitly confirm that the iPhone 5 was excluded from guidance, analysts believe this to be the case.

Sprint's management is intently focused on EBITDA performance in the second-half  in order to regain investor support, and we recommend investors buy Sprint shares at these depressed levels as we do not expect net EBITDA dilution to be significant, FBR Capital Markets analyst David Dixon wrote in a note to clients.

Dixon said initiatives are underway to address higher 4G cash payments to Clearwire should materially lower aggregate payments and initiatives that drove sequential subsidy pressure of $120 million in the second quarter have been reined in. In addition, the company is targeting a significantly lower advertising and marketing spending program in the second half to offset iPhone subsidy pressure.

We expect shares to react positively to the fact that the margin expansion thesis is intact;  the evolving LightSquared situation; developments in the AT&T/T-Mobile merger process, Dixon wrote.

The analyst said Sprint has several sustainable advantages including simplicity, value, solid 3G and 4G products (now augmented with the iPhone 5), and improving network quality.

A Sprint iPhone 5 is positive from the perspective of gross add momentum, lower churn and higher ARPU as this substantially improves the device portfolio relative to AT&T and Verizon.

On the negative side, the iPhone will likely drive higher upgrade costs through higher device subsidies in the near term but EBITDA dilution will likely be muted by lower operating costs through multiple initiatives, including lower advertising and marketing spending and a greater focus on WiFi offload opportunities in the medium term.