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Sprint’s free iPhone 7 deal could make it money

By Jules Wang September 27, 2016, 8:25 pm

All of the big four players in the United States cellular game offered iPhone 7 promotions out of the gate.

AT&T, Sprint, T-Mobile and Verizon all offered a free 32GB iPhone 7 with an eligible iPhone 6s or iPhone 6 trade-in, but to varying degrees of flexibility. AT&T, for example, limited its audience to those who bundled in DirecTV service while Verizon also accepted “Plus” devices for the deal. Sprint offered the trade-in with the option for a free storage upgrade from 128GB to 256GB for a limited time.

Thing is, AT&T and T-Mobile have already ended their offers. This “free” stuff doesn’t come from nowhere and it definitely doesn’t come from Apple. Verizon is keeping on the train, likely with the help of its deep pockets and its largest-in-the-nation user base. But what about Sprint? It’s number four in subscribership and it’s reining in capital expenditures as best as it can.

Well, it could be the Now Network that could end up losing less money and, perhaps, break even with the deal because of two outstanding factors as pointed out by Wells Fargo’s Jennifer Fritzsche in an investment note.

“[We] can make a case that [Sprint’s] total recoverable amount for this device is $400 (at the low-end) to breakeven / profitable at the high-end,” the note said.

That’s because Sprint’s parent company, SoftBank, also owns the nation’s largest used device distributor, Brightstar. The two can maximize value for every handset taken it since they share bottom lines. An iPhone 6 can top out at $200 in recoverable value while an iPhone 6s maxes out at $400.

Here’s the bittersweet part: Sprint is the only carrier offering the “free” iPhone 7 through an 18-month lease, thus giving the customer an option to pay up about $175 to own the phone or to let go of the device and let Sprint optimize its device recovery. Everyone else is covering the full price of the phone and eating anywhere from $300 to $400 in conversion costs.

But you can’t blame Sprint for working the dynamics of this deal to benefit its purse’s punching weight. It’s the reason why it’s still out there right now.

Source: FierceWireless
Via: PhoneArena

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