Sprint Corp. CEO Marcelo Claure, who has vowed to end the carrier’s seven-year streak of subscriber losses, is willing to almost give away new iPhones to achieve his goal.
Sprint stores on Friday kicked off iPhone 6S sales with lease offers that start at $1 a month. The limited-time promotion, which requires customers to trade in their iPhone 6 phones, doesn’t include the cost of service plans.
The offer beats T-Mobile US Inc.’s $5-a-month iPhone lease, which until now had been the lowest-priced deal for consumers.
“It’s a desperate move,” said Roger Entner, an analyst with Recon Analytics LLC. “You don’t make money on $1 device leasing.”
Including the iPhone 6’s trade-in value, Entner estimates that Sprint is losing $24 a month on each new $1 lease.
Claure is trying to pull Sprint out of a long tailspin — eight unprofitable years of losses — by cutting prices to win users. Sprint was the first carrier to try to lure customers from its larger rivals by offering to reduce their service bills in half. Now with the $1 lease on the iPhone 6S, Sprint is leading the price battle lower.
Sprint is creating a leasing company for its phone business, which will allow the carrier to separate some of the phone costs and installment financing duties.
This kind of arrangement will require money upfront for Sprint to purchase devices, and SoftBank, which owns more than 82 percent of the carrier, has agreed to be a minority investor to help fund the arrangement.
The shift to leasing — a trend that Apple Inc. also jumped on with the introduction of the latest iPhones — provides consumers new phones with payments spread over several months.
Lower lease prices combined with cheaper service plans have helped T-Mobile and, more recently, Sprint attract new subscribers and threaten larger rivals Verizon Communications Inc. and AT&T Inc.
