"The number-one reason customers leave Sprint … is 'No iPhone,' and we believe the number-one reason new customers don't try Sprint has been 'No iPhone.'" -- Dan Hesse, CEO of Sprint Nextel
(NYSE: S), from a transcript of Sprint's third-quarter earnings conference call.
At the time of that statement in late October, Sprint had been offering the iPhone for only a short time, but as Hesse added in that same call, "We believe two weeks in the market is not enough time to constantly estimate expected gross-add percentages … but early indications are extremely encouraging."
Below is a chart showing Sprint's 2011 stock price along with the percentage of its revenue growth. Note the precipitous drop in the blue revenue-growth line until it reaches the end of the third quarter. If, as CEO Hesse says, the iPhone will promote a turnaround in Sprint's customer and revenue growth, that blue line should follow a significant upward trajectory when the company's fourth quarter earnings are released.
The iPhone paradox
Estimates are that Sprint activated almost two million iPhones in the fourth quarter. That should be compared to the 7.6 million iPhones that AT&T
When Sprint signed its iPhone deal, it did not immediately release that deal's cost because it knew that the four-year, $15 billion agreement it made with Apple
The 4G predicament
Sprint's supplier of 4G services has been -- and still is -- Clearwire
Earlier in the year, the carrier had been pinning most of its LTE hopes on LightSquared to provide a 4G LTE network. Unfortunately, LightSquared has become embroiled in one controversy after another, from its network interfering with GPS devices, to an accusation of bribery from Sen. Chuck Grassley (R-Iowa). As LightSquared becomes a less-likely LTE candidate, Clearwire -- which has managed to raise the money it said it needed to build an LTE network -- becomes much more attractive.
So the main things to look for in Sprint's upcoming fourth-quarter earnings report boil down to what effect the iPhone has had on revenues and profit margins; and the company's 2012 LTE rollout projections. Stay tuned for the Fool's coverage of Sprint's earnings statement as soon as it comes out.
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Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.