Sprint Nextel Pins Its Hope on iPhone

Smartphones have become a part of life, with Google's Android platform and Apple's (NAS: AAPL) iPhone leading the way. Sprint Nextel (NYS: S) is currently in third place behind leaders Verizon Wireless (NYS: VZ) and AT&T (NYS: T) , with approximately half the subscribers of the leading carriers. However, Sprint may start to make a dent in this gap with the announcement that it will be carrying the upcoming iPhone 5 when it launches in October. It will also be authorized to begin selling the iPhone 4 at the same time.

Nearly 45 million opportunities
AT&T and Verizon have the strongest positions when it comes to mobile phone service, with nearly 206 million subscribers combined. However, Sprint may have the best chance of taking customers from smaller regional phone providers. If Sprint is able to attract some of these customers simply by offering the iPhone, along with its unlimited data plan, it might be able to compete with the bigger providers.

Provider

Subscribers

Owner

TracFone Wireless

17.75 million

America Movil

MetroPCS (NYS: PCS)

8.20 million

MetroPCS

Clearwire (NAS: CLWR)

6.15 million

Sprint Nextel

U.S. Cellular (NYS: USM)

6.07 million

Telephone and Data Systems

Cricket

5.60 million

Leap Wireless (NAS: LEAP)

Total

43.77 million

 

Source: Company websites.

Big seller for others
The iPhone will not save Sprint by itself, though it will help it compete with the other carriers that provide the phone. Instead of losing subscribers who want an iPhone to competitors, they will be able to offer the phone to current customers. The iPhone was a boon to Verizon when it began offering the phone earlier this year, selling 4.5 million of the devices in the first half of 2011.

AT&T has continued to profit from its option to sell the iPhone, selling more than 7.2 million devices the first half of 2011. This number includes both the iPhone 4, as well as the previous version of the iPhone. Although it is hard to imagine Sprint selling the same number of devices because of its small subscriber base, the ability to sell the latest versions of the phone will help.

Big merger could hurt
Throwing a wrench into Sprint's chances with the iPhone is the proposed merger of AT&T and T-Mobile USA. Although the Department of Justice has stepped in and sued to stop the potential merger, T-Mobile may be able to leap ahead of Sprint based on potential concessions required to complete the deal.

But there may be an opportunity if the merger is allowed to occur. T-Mobile customers angry with the merger could consider Sprint.

What's ahead for Sprint?
It is hard to say now if the iPhone will drive customers to Sprint en masse, but the potential is there. Regardless, the iPhone will help Sprint better compete with the mobile phone leaders. To keep an eye on Sprint and its future with the iPhone, be sure to add it to your watchlist.

At the time this article was published Fool contributor Robert Eberhard does not own shares of any companies mentioned here. Follow him on Twitter @GuruEbby. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and AT&T. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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