Sprint defends iPhone decision, will need up to $7 billion in financing help

Sprint had a notable Q3, with the addition of 1.3 million subscribers, its best wireless net subscriber additions in five years, and a loss of 44,000 contract subscribers, down from 107,000 a year ago. More notable, it achieved this without the benefit of the Apple iPhone 4 and 4S, which it began offering Oct. 14. (Its quarter closed Sept. 30.)

The iPhones recently gave Sprint its best-ever retail sales day, and the carrier expects the devices to be "accretive" and their users to be among Sprint's most profitable.

"The number one reason customers leave Sprint, or churn, has been no iPhone, and we believe the number one reason new customers don't try Sprint has been no iPhone," Sprint CEO Dan Hesse said during the earnings call. "Our early results of selling the iPhone 4 and iPhone 4S have confirmed the iPhone's ability to attract new customers."

While two weeks on the market isn't long enough to confidently estimate the expected gross add percentages from the devices, "early indications are extremely encouraging," said Hesse. He added, "A high gross add percentage translates to revenue growth and provides an even more compelling reason for Sprint to carry the device."

It was a nice setup for news that Sprint will need to raise between $5 billion and $7 billion in new financing agreements over the next few years to support the build-out of its network and its iPhone commitment, for which it is paying Apple a subsidy that's 40% higher than it pays for other phones.

Hesse and his team offered metrics and explanations detailing how the iPhone, despite high up-front costs, should pay off for it in the end, including a customer lifetime value figure that's expected — thanks to lower churn and efficient network use — to be 50% greater than with other smartphone users.

One slide showed Sprint swimming in iPhone and Network Vision (its plan for consolidating its networks into a single one) debt in 2011. By 2012, Network Vision and iPhone benefits show up, though are still far overshadowed by their costs. By 2014, there's more green than red on these fronts, and in 2015 Sprint is letting out sighs of relief. Ideally.

During the call, Hesse additionally announced that Sprint had signed a non-binding cooperation agreement with Clearwire that would assure Sprint users access to the Clearwire LTE network in the future — a deal certainly colored by its need to support and drive future iPhone adoption.

Hesse, offering a "Moneyball" analogy in which Sprint is the doubted but smart-risk-taking Oakland A's liked the iPhone to a top player. "The iPhone has an expensive contract, but he's worth every penny."