Carrier Sprint Nextel, the third-largest wireless operator in the United States, today released earnings for the third quarter of 2011 ended September 30. The numbers represent a mishmash of the good, the bad and the future promise of the iPhone. Net operating revenues climbed to $8.3 billion, a two percent annual growth, and net losses were around $301 million, which is a decrease compared to the year-ago quarter. More importantly, Sprint’s wireless net subscribers reached a five year high and the carrier boasted how this was achieved without the benefit of Apple’s iPhone 4S and iPhone 4, which launched October 14.

Speaking of Apple’s handset, Sprint wrote in earnings release:

The launch of this iconic device resulted in Sprint’s best ever day of sales in retail, web and telesales for a device family in Sprint history. The response to this device by current and new customers has surpassed initial expectations. The iPhone is expected to be accretive for Sprint, and iPhone users are expected to be among Sprint’s most profitable customers.

The company also argued that upgrades as a percentage of their subscriber base declined slightly during the third quarter “likely due to customer expectations of a fourth quarter iPhone launch”. Sprint CEO Dan Hesse told analysts on a conference call that Apple’s handset would be worth the investment because the device has already lured record numbers of new customers:

iPhone has an expensive contract, but is worth every penny.

Sprint reportedly bet the farm on Apple’s phone, having pledged to invest an astounding $20 billion to buy 30.5 million iPhones. Sprint CEO Dan Hesse told the board in August that his company “would likely lose money on the deal until 2014″. Reuters reveals that Sprint would pay a 40 percent higher subsidy to Apple than the industry average, amounting to $200 more per device. Sprint would need $7 billion in financing “to cover a cash shortfall caused by heavy investments in the Apple Inc iPhone introduction and a big network upgrade”.

Full earnings report is available here.


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Sprint is the third major US carrier to land the iconic handset after Apple made a CDMA version of the device for the Verizon Wireless network earlier this year. Sprint vice president of network development and engineering Iyad Tarazi said at the 4G World conference in Chicago on Tuesday that the carrier would begin rolling out a 4G LTE-Advanced network in its 800MHz frequency spectrum (which boasts data speeds between 12-15Mbps) by the middle of 2013.

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