If the rumor mill is correct, Sprint prepaid brand Virgin Mobile USA is set to become the second operator in the country to offer the iPhone without a contract.
Sprint is expected to announce this week Virgin Mobile will get the iPhone as early as July 1, according to a report in The Wall Street Journal which cited unnamed sources “familiar with the company’s plans.”
The news comes after Leap Wireless International subsidiary Cricket Communications said late last week it would begin selling a prepaid iPhone on June 22 under a $900 million contract with Apple.
Details have yet to emerge about how much Virgin Mobile will charge for the iPhone. It is also unclear whether Boost Mobile, another Sprint prepaid brand, will get the phone. Sprint recently began offering prepaid WiMAX through its Virgin Mobile and Boost Mobile brands, a service it had historically only offered on a postpaid basis.
Sprint itself has been offering the smartphone since last fall, when it signed a $15.5 billion four-year contract with Apple for access to the device. Selling the iPhone through its prepaid brands could help it meet purchase obligations under its contract with Apple, allowing it to avoid racking up unsold devices.
Sprint’s iPhone sales have lagged behind its larger competitors. It sold 1.5 million iPhones during the first three months of the year, less than half the 3.2 million sold by Verizon during the same period and considerably less than the 4.3 million activated by AT&T.
Sprint had about 15 million prepaid subscribers at the end of the first quarter, about half its 33 million postpaid customer base. Its prepaid subscribers have lower ARPU and bring in significantly less revenue than its contract customers. Sprint’s prepaid businesses brought in revenue of $1.2 billion during the first quarter, a fraction of the $5.9 billion it gleaned from its postpaid brands.
The report of a possible second prepaid iPhone comes as Apple has made the device available to a wider range of wireless operators. A number of regional carriers now sell the iPhone, including C Spire Wireless, Wisconsin-based Cellcom and Alaska’s General Communication Inc.
When Cricket announced it would offer a prepaid iPhone, analyst Jeff Kagan said it wouldn’t be the only operator to offer the device on a no-contract basis.
“Will this mean that other existing networks will now also sell the iPhone in their pre-paid world? Yes I believe it will,” he said in a research note last week. “Expect to see the iPhone being sold as a pre-paid device on multiple networks going forward.”
Cricket is charging more upfront for the device – $500 for the 16 GB model of the iPhone 4S, compared to $200 at most postpaid providers – but is offering it with lower monthly rates than contract plans.