Sprint enters into $20 billion, multi-year iPhone pact

Sprint Nextel has entered into a multi-year deal with Apple as part of its agreement to carry the iPhone that will see the number three U.S. carrier purchase a guaranteed number of iPhones over the next four years. Citing people familiar with the matter, the Wall Street Journal reports that Sprint has agreed to purchase 30.5 million iPhones—$20 billion worth, at current rates—over the next four years whether or not it is able to sell them all. “This is a bet-the-company kind of thing,’’ said a person familiar with the company’s decision making, adding that the projected hit to the company’s operating income is “staggering.” According to the report, Apple also requires other carriers to make long-term volume commitments for the iPhone, which in turn helps them in component purchasing decisions. The report notes that Sprint is expected to offer unlimited data plans for the iPhone, distinguishing it from rival carriers Verizon and AT&T, and that the deal isn’t expected to become profitable until 2014. Sprint CEO Dan Hesse recently said that the lack of the iPhone is “the No. 1 reason customers leave or switch.”

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