The iPhone Could Be Worth More Than $1 Billion To Sprint

| About: Sprint Corporation (S)
Sprint (NYSE:S) received a shot in the arm this week with the announcement that it will begin selling the Apple (NASDAQ:AAPL) iPhone this fall. This will allow Sprint Nextel to join the big boys [AT&T (NYSE:T) and Verizon (NYSE:VZ)] as the third provider of the most popular smart phone in America.
Sprint shares jumped $.33 or 10% during the first day following the iPhone announcement. That resulted in the market cap increasing by about $1 billion. However, this could just be the beginning of an extended rally for Sprint.
The telecom stock has struggled with subscriber growth lately and has been desperately searching for a catalyst to stop the exodus of customers to Verizon and AT&T. In 5 out of the past 6 quarters, Sprint has reported a net decline in post-paid subscribers.
That could all change now that Sprint will have a compelling phone offering. Now not only will Sprint be able to offer the iPhone 5, but it will also be able to offer the most compelling data plans to go with that phone.
Sprint looks to have two key advantages over AT&T and Verizon once it begins selling the iPhone this fall. First, it will be the only wireless provider offering an unlimited data plan. Secondly, its Voice+Text+Data plans are less expensive than what AT&T and Verizon currently offer. That could bring both cost-conscious buyers along with heavy data users into the Sprint network.

If the iPhone does in fact reverse the subscriber trends that Sprint has experienced in recent years, the company's market cap could climb by a lot more than $1 billion. Many Wall Street analysts were bullish on Sprint given the low valuation even before the iPhone announcement. Now the stock has both an attractive valuation and a potential catalyst as the company heads into 2012.

Disclosure: I am long AAPL.