Wednesday, May 16, 2012, 08:55 am PT (11:55 am ET)
Sprint won't profit from carrying Apple's iPhone until 2015, has no regretsSprint's CEO views his company's up front payment to offer the iPhone as a long-term investment that won't see any returns until 2015.
Sprint is estimated to spend $15.5 billion on the iPhone over the next four years, but by 2015 its investment will be "quite profitable," CEO Dan Hesse said during his company's shareholder meeting on Tuesday, according to All Things D. He added that he and his company are "very happy" with Sprint's deal with Apple.
"We believe in the long term," Hesse said. "And over time we will make more money on iPhone customers than we will on other customers."
Hesse has found himself under fire from some shareholders who believe Sprint's iPhone deal with Apple is not ideal for the carrier. That prompted him to return $3.25 million in compensation last week, after some expressed dissatisfaction that Sprint had excluded the financial effect of carrying Apple's iPhone when calculating employee bonuses.
It was reported last year that Sprint agreed to purchase 30.5 million iPhones from Apple for nearly $20 billion over the next four years. The Wall Street Journal characterized the deal as a move that "bet the company" on the iPhone.
Hesse believes the major upfront investment taken by Sprint to offer the iPhone will pay for the company in the long term, bringing in higher value customers to the third-largest carrier in the U.S. The carrier sold 1.5 million iPhones in the first quarter of calendar 2012, and another 1.8 million in the holiday quarter that concluded 2011, and more than 40 percent of those sales were to new subscribers.
Sprint's investment has been made on the belief that iPhone users are "more profitable" than other customers, such as those who buy smartphones running the Google Android operating system. Hesse previously said that iPhone users use less data on average than other smartphone customers, which costs network operators like Sprint less money.
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