Sprint to pay Apple $15.5 billion for iPhone over next four yearsAlex Wagner - Editorial Director of News and Content
Earlier this month Sprint joined AT&T and Verizon as the third carrier to offer Apple's iPhone in the U.S., adding both the iPhone 4 and iPhone 4S to its lineup of devices. Ever since then there have been folks wondering exactly what the Now Network had to give up in order to get iOS devices on its shelves. Sprint recently revealed as a part of its Q3 2011 earnings report that it has agreed to pay Apple at least $15.5 billion to Apple over the next four years for the iPhone. The No. 3 carrier may end up paying even more, though, because that figure is based on the number of phones that it sells. The subsidy that Sprint is paying to Apple for each iPhone works out to be around $200 higher than what it pays for other handsets in its roster, but CEO Dan Hesse believes that the device "is worth every penny."
Sprint also said that might need as much as $7 billion in financing over the next few years to help cover the costs of the iPhone, upgrading its 3G network, and making the move to 4G LTE. Just how does Sprint plan to get the cash it needs? The carrier has said that it will need to refinance $4 billion of debt and raise another $3 billion from vendors so that it can keep around $2 billion of cash on hand.
On the day that the iPhone 4 and 4S launched on Sprint, the carrier said that the handsets had set a record for number of sales of a device family by 1 PM, so it definitely looks like the demand for an iOS device on the Now Network is there. Whether it's enough to really help Sprint grow and to justify paying Apple $15.5 billion remains to be seen, but we should begin to get an idea of what effect the iPhone will have on Sprint when we get the company's Q4 2011 earnings report. Stay tuned.