iPhone effect: Sprint gains customers & revenue, loses $1.3 billion in Q4

Sprint iPhone4

The addition of Apple’s iPhone to its mobile lineup gave Sprint a boost in both revenue and customers during the fourth quarter of 2011. Despite these gains, America’s third-largest wireless company still posted a loss of $1.3 billion, or $0.43 per share, thanks in part to the high cost of subsidizing the iPhone. Sprint’s revenue rose 5 percent to $8.7 billion.

According to its earnings report, Sprint sold 1.8 million iPhones during the last three months of last year. AT&T, by comparison, sold 7.6 million iPhones, while Verizon sold 4.2 million. In total, Apple sold 37 million iPhone units during the quarter, 63 percent of which took place outside the US.

Sprint says 40 percent of all iPhone buyers were new customers, which means the company gained 720,000 subscribers thanks to the iPhone. The total net subscriber increase came in at 1.6 million during the quarter. Even with the subscriber boost, the iPhone still costs Sprint a lot of money. In order to bring down the cost of the iPhone for new customers, Sprint must spend $200 more on each iPhone sold than it does on other devices. The company does not expect sales of the iPhone to turn a profit until 2014.

“Our strong fourth quarter performance illustrates the power of matching iconic devices like the iPhone with our simple, unlimited plans and industry-leading customer experience,” said Dan Hesse, Sprint CEO, in a statement. “During the past year, Sprint added more than 5 million net new customers and grew wireless service revenue by more than 5 percent, including 17 percent for the Sprint platform. This momentum gives us confidence as we execute our Network Vision upgrade and 4G LTE roll-out.”

Sprint plans to begin to implement its 4G LTE network by the middle of this year. Kansas City and Baltimore will join Houston, Dallas, San Antonio, and Atlanta as the first six markets to receive the 4G LTE upgrade. At present, Verizon has the nation’s largest LTE network. At the beginning of January, AT&T rolled out its LTE network to 11 additional markets, bring the total number of 4G LTE-enabled regions to 26. Sprint expects to spend an additional $6 billion in 2012, at least part of which will go to LTE expansion, as it attempts to compete with Verizon and AT&T.

Updated with additional information at 10:45am ET.