Sprint Nextel Corp said on Thursday its Virgin Mobile prepaid business would start selling Apple Inc's iPhone later this month, pitching it against smaller prepaid rival Leap Wireless International Inc.
Sprint shares closed up almost 1 percent after it said the addition of the iPhone to its Virgin brand would not hurt its 2012 earnings and would help it reach its overall $15.5 billion commitment to Apple for a certain phone volume over a few years.
Virgin customers, who do not commit to a contract and pay for calls in advance, will pay more than three times the price for an iPhone that Sprint contract customers pay. Contract customers get a big discount in exchange for staying with Sprint for two years.
Virgin customers will pay $649 for the iPhone 4S, compared with $200 for Sprint contract customers.
Wells Fargo analyst Jennifer Fritzsche questioned how many Virgin customers, who tend to be more cost conscious, would be able to afford the steep price, even as she said Sprint priced the product to minimize risk.
Sprint said Virgin would start selling the device on June 29. Leap Wireless said on May 31 it would start selling iPhone on June 22. Leap will charge less than Virgin for the device, but its monthly service fee is higher.
Virgin's service plan for iPhone customers will start at $35 per month and customers can get a $5 discount if they register for automatic monthly payments, bringing the service price down to $30. This compares with the $55 per month minimum for customers of Leap Wireless.
Sprint shares closed up 2 cents at $2.74 on the New York Stock Exchange.
(Reporting By Sinead Carew; editing by Gerald E. McCormick, Jeffrey Benkoe and Andre Grenon)