In a recent interview with GSMA’s Mobile World Live, Sprint CEO Dan Hesse defended his decision to sign a $15.5 billion four-year agreement with Apple to begin selling the iPhone last year. Why would Hesse have to defend signing a contract to sell one of the most popular phones in the world? Last week, Sanford C. Bernstein said it estimates that Sprint isn’t going to be able to move enough iPhone units in order to make that $15.5 billion commitment worth it and that it could face bankruptcy if it fails to support a 4G LTE model.
“What’s unique is that four out of every ten iPhones we sold [during the fourth quarter] are for new customers… that’s roughly double the rate of either of our competitors, so we’re pulling a lot of customers from our competitors,” Hesse told Mobile World Live. “Subsidies are heavy for the iPhone – this is the reason why a high percentage of new customers is important. But iPhone customers have a lower level of churn and they actually use less data on average than a high-end 4G Android device. So from a cost point of view and a customer lifetime value perspective… they’re more profitable than the average smartphone customer.”
Hesse said customers are attracted to Sprint’s iPhone because Sprint is the only carrier that offers a truly unlimited data plan with the device. He also added that Sprint will continue to offer the unlimited option for “as long as [it] can. “The customers have spoken very clearly on this: they like simplicity and unlimited,” Hesse said. “It’s a differentiator in the market.”