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Sprint To “Bet the Company” on $20 Billion iPhone Deal

It was previously reported the next-generation iPhone would be available on U.S. carrier Sprint, and today The Wall Street Journal adds some details to its initial report, claiming that Sprint is “betting the company” on a $20 billion iPhone deal that will see Sprint purchasing 30.5 million iPhones over the next four years.

New details, not previously reported, give a rare look at Apple’s closely guarded dealings with carriers, and reveal just how high the stakes are for Sprint.

Mr. Hesse told the board the carrier would have to agree to purchase at least 30.5 million iPhones over the next four years—a commitment of $20 billion at current rates—whether or not it could find people to buy them, according to people familiar with the matter. In order to keep the price people pay for the phone low and competitive with rivals, Sprint would be subsidizing the cost of each phone to the tune of about $500, which would take a long time to recoup even at the high monthly fees iPhone users pay.

Sprint’s board called the iPhone “project Sony” internally, and a person familiar with the matter has been quoted by the WSJ saying “We have to have it”. The deal’s hit on Sprint’s operating income is “staggering”, according to another source. In a lawsuit filed against the AT&T / T-Mobile merger in September, Sprint said the company “has had to compete without access to the iPhone for nearly five years”.

Apple is expected to introduce a new iPhone tomorrow in Cupertino at 10 AM Pacific time. Check out our roundup for a breakdown of rumors and predictions.

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