Optical/IP Networks

Sprint's Q4 iPhone Activations Could Total Nearly 2M

A UBS Investment Bank analyst is predicting that nearly 2 million iPhone activations in the fourth quarter will be some good news in a generally downbeat chapter for Sprint Corp. (NYSE: S)'s subscriber addition and retention story at the end of 2011.

Analyst John Hodulik wrote in a research note Tuesday that UBS is expecting to see 1.9 million iPhone activations at Sprint in the fourth quarter. Despite this, Hodulik believes that "Sprint will see sequentially higher churn in 4Q and 1Q due to a number of issues related largely to sales of higher end devices through the Radio Shack channel to lower end customers without a credit check."

The analyst is taking his clues from the RadioShack's release of preliminary fourth-quarter results on Monday. "RadioShack blamed 'underperformance of the Sprint postpaid wireless business' and 'further unanticipated changes in Sprint's customer and credit models,' resulting in fewer new lines and upgrades, and lower postpaid revenues from Sprint," Hodulik notes.

A pre-release of Clearwire LLC (Nasdaq: CLWR)'s coming earnings last Tuesday has already suggested that Sprint might be focusing less on 4G WiMax sales this quarter. Clearwire, which makes most of its sales through Sprint, added 900,000 4G wholesale customers in the last three months of 2011, down from 1.9 million in the previous quarter and 1.5 million in the second quarter.

Why this matters
Like other U.S. carriers in the fourth quarter, the iPhone is a long-term growth driver for Sprint. Initially, however, the upfront subsidy for the monthly contract device could hit Sprint in the margins, as UBS notes.

Sprint will report its fourth-quarter numbers on Feb. 8.

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— Dan Jones, Site Editor, Light Reading Mobile

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