On Thursday, Sprint Nextel Corp. (NYSE:S), the No. 3 U.S. telecommunications company, became the latest of the trio to confirm that the iPhone 5 and its predecessors are profit generators. In the third quarter, while the overall company lost subscribers, new iPhone buyers helped add to Sprint’s continuing business.
Indeed, the Overland Park, Kan., mobile company said it had sold 1.5 million iPhones in the third quarter, with 40 percent going to new Sprint customers. That was better than the results for AT&T Inc. (NYSE: T), the No. 1 telecommunications carrier, as well as the Verizon Wireless unit of Verizon Communications (NYSE: VZ), the No. 2 U.S. carrier.
“The operational performance, so far, continues to validate our decision to invest in the iPhone,” said Sprint Dan Hesse to analysts after results were reported. Last year, Sprint made a $15.5 billion five-year sales commitment to Apple, of Cupertino, Calif., to support the line.
Now Sprint has agreed to be acquired by Japan's SoftBank (Tokyo: 9984) in part to get a financial lifeline. Still, the company reported a third-quarter net loss of $767 million, or 26 cents a share, far below analysts’ estimates of a loss of 43 cents a share.
Last week, Verizon Wireless, which has carried the iPhone since the first quarter of 2011, reported gaining 1.5 million subscribers in the third quarter, as it activated 3.1 million iPhones overall, including 651,000 iPhone 5 units.
In the mobile race, AT&T, with 105.9 million subscribers, is a big No. 1, as well as the first to offer the iPhone, followed by Verizon Wireless, with nearly 96 million subscribers and then Sprint, with 56 million.
The next two carriers, the T-Mobile USA unit of Deutsche Telekom (Pink: DTEGY) and MetroPCS Communications (NYSE: PCS), which plan to merge in a complex transaction next year, don’t yet carry the iPhone. But Deutsche Telekom does carry it in Germany.
Next month, Sprint’s Hesse said, his company anticipates a smooth rollout of Apple’s iPad with a long-term evolution (LTE) connection next month. The should further help Sprint increase its average revenue per user, which rose to $61.18 from only $57.65 a year earlier. Smartphones generate more usage for data.
By contrast, AT&T’s average rate was $65.20 and Verizon Wireless’s was $145.42.
Prospects are that all carriers will carry more smartphones, not just from Apple, in a bid to boost traffic. Verizon now has 53 percent of its customers on them, compared with AT&T’s 64 percent. Sprint’s percentage wasn’t available.
Sprint shares fell a dime to $5.52 in Thursday trading.