The LTE iPhone Could Help Bankrupt Sprint

By

Sprint might be bankrupt by the device it hopes saves them.
Sprint might be bankrupt by the device it hopes saves them, says one analyst.

When third-place carrier Sprint first got the iPhone 4S, it quickly became clear that they had literally bet the company on the notion that Apple’s popular handset could save them from being steamrolled by AT&T and Verizon. In fact, Sprint agreed to pay Apple $20 billion over the next four years just to secure rights to the iPhone, whether they can sell them or no. The whole company is riding on the iPhone.

That could have turned out to be a big mistake suggests a new report today, which says that the nation’s third largest carrier is on the verge of going bankrupt. And what bankrupted them? The iPhone.

According to Bernstein analyst Craig Moffett, Sprint is facing “increased competition, growing debt and steep costs, with flops in Clearwire’s WiMAX technology, a failed LightSquared partnership and a risky $15.5 billion gamble on Apple’s iPhone,” all of which may drive Sprint to bankruptcy courts.

That’s pretty bad already, but if Apple releases an LTE iPhone later this year, which it is believed they will do, things could get a lot worse for Sprint. LTE is coming to Sprint in 2012, but Verizon and AT&T’s deployment of LTE is far, far further along than Sprint’s. You think people buying new AT&T LTE iPads were dumb? Imagine the iPhone 5 equivalent.

That said, there’s no indication right now that Sprint is planning on filing a 404. Rather, the analyst in question is simply talking about risk, and as he sees it, the risk of Sprint going bankrupt has gone up markedly in 2012. Who knows where Sprint will find itself by the end of the year, but one thing’s for sure, it’s got an uphill struggle with the billions it owes Apple.