NEW YORK (AP) — The iPhone boosted struggling Sprint Nextel Corp. in the latest quarter, letting it beat AT&T and perhaps even Verizon in recruiting high-paying phone subscribers to the Sprint network.
Sprint started selling the iPhone in October, after AT&T and Verizon. To get it, it had to promise Apple that it would buy phones for $15.5 billion over four years — a big sum for a company in a precarious financial position — and analysts have noted that the phone could push Sprint over the edge, into bankruptcy.
But in the first quarter, the iPhone appeared to help Sprint recruit subscribers and get more money out of each one.
Sprint added a net 263,000 subscribers to the Sprint network on contract-based plans, which are the most lucrative. That was up just a smidgen from last year's figure in the same quarter, but it comes as AT&T and Verizon Wireless have seen big drops in new customers.
Excluding tablets, which earn lower fees, Verizon Wireless added a net of about 240,000 customers in the quarter, while AT&T added 7,000.
The Sprint figure includes some tablets, but the number is likely small, because unlike Verizon and AT&T, Sprint does not sell the iPad.
Sprint's data network is much slower than Verizon's or AT&T's, but it has been luring smartphone subscribers by offering unlimited data usage. AT&T and Verizon Wireless have stopped signing up new customers for unlimited data plans, and AT&T has started slowing down data usage severely once customers on its "unlimited data" plan hit certain usage limits.
On a call with analysts Wednesday, Hesse defended the iPhone, saying customer desire for the device and lower customer support costs justify the price.
"The evidence so far supports our decision to carry the phone," Hesse said.
Sprint activated 1.5 million iPhones in the quarter, down from 1.8 million in the fourth quarter.
Helped by a $10 per month surcharge on smartphones imposed last year, Sprint's wireless service revenue rose 7.4 percent from a year ago, compared to 7.7 percent at Verizon, which has had more time to sell the iPhone. At AT&T, the figure was 4.3 percent.
"Sprint posted easily the most impressive (quarter) in U.S. telecom," said Kevin Smithen, an analyst at Macquarie Securities.