Just as Apple posted itsmassive earnings, Sprint Nextel, the third largest wireless telecommunications network in the United States, behind Verizon Wireless and AT&T Mobility, published on Wednesday their first-quarter earnings ahead of the bell.
According to apress release, subsidy costs climbed from $1.1 billion in the year-ago quarter to $1.6 billion in the first quarter of 2012, largely due to Apple’s device:
The quarterly year-over-year increase in net subsidy is primarily due to the launch of the iPhone, which on average carries a higher subsidy rate per handset as compared to other handsets.
Also, this:
Sales expenses increased year-over-year primarily due to iPhone point-of- sale discounts (subsidy) for devices directly sold by the manufacturer to indirect dealers in which Sprint does not take device title, as well as higher postpaid gross additions. The impact from the iPhone was partially offset by improvements in sales channel mix with a larger portion of activations coming from direct retail channels.
Sprint’s $863 million loss is lower than a staggering$1.3 billion lossduring the holiday quarter of last year, when it reported shipments of 1.8 million iPhones. Earlier this week, carriers AT&T and Verizon reported4.3 millionand3.2 millioniPhone activations, respectively.
Sprint bet the company by prepaying a whopping$15 billionlast year to land the iPhone, prompting concerns that the company might go bankrupt.
Sprint CEODan Hesse arguesthat iPhone customers are more profitable while on average using less data on their network compared to other smartphone customers.
Note, however, that this could be due to Sprint’siPhone customers not achieving full 3G speedsas their network exhibits by far theslowest download speedsamong the big three carriers.
The company previously hinted that an upcoming sixth-generationiPhone will be eligible for the Unlimited Everythingplans on Sprint’s upcoming 4G LTE network. Sprint promised to toll out 4G LTE network in six major cities this summer.
They already have 600 new network sites up and running and are hoping to light up an additional 7,700 sites. In all, Sprint is aiming to bring 12,000 sites live by the end of this year.
