Sprint Nextel CEO Dan Hesse — who took an US$3.25 million pay cut earlier this month for orchestrating the company’s pricey iPhone deal with Apple — says the company won’t profit from the deal until 2015, reports “AllThingsD.”
The deal will purportedly cost Sprint an estimated $15.5 billion over the next four years. However, Hesse said during the company’s annual shareholders meeting today that “we’re happy with it” because the initial heavy upfront investment in the iPhone is worthwhile because it will slow subscriber turnover and create a new segment of higher-value subscribers.
“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.”
The carrier sold 1.5 million Apple smartphones during its winter quarter — with 44% going to new customers. Sprint Nextel reported a net loss of US$863 million and a diluted net loss of $.29 per share for the first quarter of 2012. This compares to a net loss of $439 million and a diluted net loss of $.15 per share in the first quarter of 2011.
The company had wireless service revenues of $7.2 billion during the quarter, an increase of more than 7% year-over-year. The company reported total net subscriber additions of nearly 1.1 million during the first quarter, bringing total ending subscribers to a record 56 million.
The total number of customers on the Sprint platform grew almost 4% sequentially including 263,000 postpaid net subscriber additions, 870,000 prepaid net subscriber additions and 785,000 wholesale and affiliate net subscriber additions.
For more go to http://allthingsd.com/20120516/sprints-hesse-well-make-money-on-the-iphone-eventually/ .
