uploads///Telecom Sprint Q Net Leased Devices

Why Is Sprint Focusing on Leasing Devices?

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Mar. 9 2018, Updated 7:31 a.m. ET

Sprint’s leased devices

Sprint’s (S) device leasing has helped it regain its financial position. The mobile carrier is striving to gain a long-term competitive advantage with its formation of a leasing company. Due to the financial benefits of leasing, it is anticipated that Sprint’s lease revenues could continue to grow going forward.

During fiscal 3Q17 (quarter ended December 2017), the mobile carrier witnessed a growth in the mix of postpaid device activations being leased at ~72%. As you can see in the chart below, leased devices in the carrier’s property, plant, and equipment came to ~$5.7 billion (net) at the end of fiscal 3Q17. During fiscal 3Q16, this figure was ~$4.5 billion.

Notably, among the top four major US wireless service providers, T-Mobile (TMUS) and Sprint offer leasing plans. AT&T (T) and Verizon Communications (VZ) do not.

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Sprint’s handset leasing benefits

Sprint’s management has highlighted that the company is anticipating a large number of used iconic devices to come back in 2018. The company receives these elapsed devices through iPhone and Galaxy Forever offers.

The iPhone Forever Plan allows the user to upgrade their Apple iPhone every year. Sprint refurbishes and resells these devices on the market. Accordingly, with the help of reselling of used devices, the company is expected to produce some additional revenue.

Sprint recently launched a Sprint Flex program that allows users to lease any phone with the option to upgrade or purchase the device later.

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