Sprint (s s) is thought to be getting the new iPhone when it arrives, and according to a new report, the company is paying dearly for the privilege. The Wall Street Journal (s nws) claims to have heard from sources close to the deal that Sprint will pay for 30.5 million iPhones over the next four years, whether or not it can sell those on to consumers.
That’s a commitment of $20 billion according to the WSJ at current rates, and Sprint CEO Dan Hesse reportedly told the company’s board that it would put Sprint in a losing financial position until 2014, according to the sources. That’s because Sprint would still also have to subsidize the cost of each phone it sells to keep it on par with rivals AT&T (s t) and Verizon(s vz).
The Sprint board reportedly balked at first, but eventually agreed to the extreme measures in order to turn around its five-year slump. Hesse is on record as saying the iPhone is the “number one reason customers leave or switch,” so it would make sense that the company would do almost anything to secure the device.
The WSJ says its sources claim Sprint isn’t the only carrier that must agree to such deals to offer Apple’s phone. Multi-year, high-volume deals are standard practice for Apple, and commitment volume has gotten bigger over the years as the iPhone’s popularity has steadily risen.
Sprint does seem to have an ace up its sleeve when it comes to the competition; the carrier seems is expected to continue offering its unlimited data plan even if it does add the device to its network. That could also make it slower to recoup investment on each iPhone, however; data usage is a big part of why iPhones eventually become profitable for network operators.
BGR followed up the WSJ‘s report with a claim that the deal will secure Sprint an iPhone 5 launch exclusive, and that the device will be WiMAX compatible. While I find it perfectly reasonable to believe that Sprint would bend over backwards to net the iPhone, I think the chances of it getting an exclusive for a device with a next-gen wireless radio that’s not considered a world standard to be completely absurd, so don’t put too much stock in that report.
Sprint has its work cut out for it in moving 30.5 million iPhones over four years, but it’s certainly doable. AT&T sold 15.6 million Apple smartphones in 2010, and though the added competition of the iPhone on three major U.S. networks will make it hard to hit that high a number again, low-cost options could help make up the difference.