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iPhone and Sprint

According to several reports, an Apple (NASDAQ:AAPL) iPhone and Sprint (NYSE:S) deal is increasingly likely with the iPhone 5 especially because Sprint will be the sole remaining carrier with an unlimited data plan offering, something desirable to Apple.

[1]

Although unconfirmed, if a deal goes through it could be a big benefit to Sprint and Apple. Apple will gain access to Sprint’s 45 million mobile subscribers, [2] thereby challenging Google (NASDAQ:GOOG) Android’s increasing presence in the mobile OS market while Sprint would now be on the same footing as AT&T (NYSE:T) and Verizon (NYSE:VZ), which already sell the iPhone.

Our $430 price estimate for Apple stock is about 20% above market price.

Apple could challenge Android’s increasing presence

According to a recent Comscore report, Android continue to widen its gap with Apple in the U.S. smartphone market with a market share of 38.1% versus Apple’s 26.6%. [3] Apple would like to narrow down this gap, and the deal with Sprint would be a good way to do it. Access to Sprint’s 45 million subscribers could help Apple gain market share at a fast rate going forward.

(Chart created by using Trefis' app)

How Sprint could benefit?

Sprint’s share in the U.S. mobile subscriber market has been on a decline since the last few years. Having iPhone will not only help it gain more subscribers and hence improve its market share, but also push up the average revenue per customer for Sprint as iPhone users are generally considered to be heavy data users.

(Chart created by using Trefis' app)

Notes:

  1. Sprint iPhone Deal Appears Likely, Barron’s quoting Citadel as source, July 6th, 2011
  2. Data taken from Sprint’s 2010 annual filings
  3. U.S. mobile subscriber market share report, Comscore, July 5th, 2011

Disclosure: No positions

Source: A Sprint-Apple iPhone Deal Could Be a Win-Win