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Sprint Nextel paid a hefty price to finally get its hands on Apple’s iPhone–to the tune of $20 billion.
That’s according to a Wall Street Journal report, which details the lengths in which Sprint went to secure Apple’s blockbuster device. Boy Genius Report piles on by adding that Sprint’s massive bet may have secured it the exclusive rights to the redesigned iPhone 5.
Sprint is willing to spend more than $20 billion for roughly 30 million iPhones over the next four years, WSJ reports.
Representatives from Apple and Sprint both declined to comment to CNET.
The investment underscores the critical importance of having the iPhone in a carrier’s lineup; AT&T and Verizon Wireless are the only two U.S. carriers that currently sell the iPhone 4. It also an illustration of the kind of power Apple has over the carriers, allowing it to wrangle such a lucrative deal that locks Sprint up for next few years.
Sprint would look to the iPhone to turn its fortunes around. While the company has made steady improvement in its core Sprint business, it continues to lose customers on the Nextel side. Sprint CEO Dan Hesse has said that the top reason customers leave is because of the iPhone.
While the iPhone would stabilize its customer base and bring in higher-revenue customers willing to sign long-term contracts, it would also lay a considerable financial blow to the company in the near term. Sprint is expected to pay a $500 subsidy per phone.
Sprint is expected to maintain its unlimited plan to set itself apart from AT&T and Verizon. The company believes the plan allows it to steal customers away from its larger rivals.
BGR reports that there will be two versions of the iPhone, the iPhone 4S and the iPhone 5. The iPhone 4S is essentially the iPhone 4 with upgraded components and new software, including the ability to handle multiple wireless standards, a faster processor, support for near-field communication, and a metal or “premium” plastic back case. AT&T and Verizon Wireless would get the iPhone 4S.
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Sprint, meanwhile, would get the redesigned iPhone 5, BGR said. The iPhone 5 features a four-inch screen, faster processor, and a WiMax connection. It will also get exclusive software and a dedicated assistant button, the Web site said.
It’s unclear, however, whether Apple would opt to give Sprint the exclusive rights to a new iPhone, even with such a large, upfront commitment. By keeping the iPhone 5 at Sprint, Apple is effectively relegating its base for the new device to Sprint customers, or subscribers on other carriers who are able to get out of their contracts easily. As the third-largest carrier in the U.S., Sprint has a significantly lower base.
It’s also uncertain how this would affect the estimates for how many iPhones get sold. Janney Capital Markets analyst Bill Choi said today that Apple could ship 84 million units this year, and as many as 107 million next year.
All will be revealed tomorrow at 10 a.m. P.T. when Apple officially unveils the device (or devices).
Updated at 2:38 p.m. PT: to include responses from Apple and Sprint.
Updated at 12:40 p.m. PT: to include additional background and details on the iPhone.
