Why Is Sprint Focusing on Handset Leasing?

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Sprint’s leased devices

Sprint (S) device leasing plans have helped it to recapture its financial position. In the past few quarters, the take rates of Sprint’s installment plans have been beaten out by its leasing plans. In the near future, Sprint’s lease revenue could rise due to the financial advantages of leasing.

Sprint’s management is anticipating the return of several million used iconic devices in fiscal 2017. Marcelo Claure, Sprint’s CEO, said, “Some of them are going to go into the offshore market, utilizing Brightstar, absolutely. And then some of them are going to be reutilized into some of our prepaid brands.”

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Sprint’s handset leasing benefits

Through the iPhone and Galaxy Forever programs, Sprint is getting back used devices. According to the iPhone Forever plan, subscribers can replace their Apple (AAPL) iPhones every year. Sprint then refurbishes and resells the returned devices in the market. With the help of its strategy of reselling used devices, Sprint is expected to produce some extra revenue in the year.

Sprint’s leased devices in property, plant, and equipment totaled ~$4.2 billion in fiscal 4Q16, whereas this number was ~$3.6 billion in fiscal 4Q15.

Among the top four US wireless behemoths, T-Mobile (TMUS) and Sprint offer device leasing plans, whereas AT&T (T) and Verizon (VZ) don’t.

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