Why Sprint Is Focusing on Handset Leasing

The take rate of Sprint’s (S) leasing plans continued to surpass its installment plans in fiscal 3Q16. Its take rate of leasing plans reached ~43.0% that quarter. As you can see in the graph below, net leased devices in the carrier’s property, plant, and equipment were net ~$4.5 billion at the end of the quarter. In fiscal 3Q15, it was ~$3.3 billion.

Among the top four US wireless players, Sprint and T-Mobile (TMUS) offer leasing plans. Verizon (VZ) and AT&T (T) do not.

On March 7, 2017, at the Deutsche Bank Media, Internet and Telecom Conference, Tarek Robbiati, Sprint’s chief financial officer, talked about the benefits that handset leasing has offered Sprint. He said, “We have been pretty good at promoting leasing and allowing customers to benefit from being always with the latest and greatest technology. And as they return those phones, we face multiple choices available to us. Either we can sell those phones or we can recycle those phones and give them a second life. And we have done so.”

Robbiati added that Sprint views leasing as a way to monetize assets multiple times over its life. As an example, he said, “The phones that we get back are put back into the market for prepaid, with different types of levels of guarantee. We call them preloved phones.”