Sprint’s Unlimited Plan Could Win Some Data Junkies from AT&T, Verizon

Sprint (NYSE:S) could offer the next version of the Apple (NASDAQ:AAPL) iPhone with an unlimited data plan. ^[1] We believe this would be a good move by Sprint as an unlimited data plan would be a unique selling point for the company with competitors AT&T (NYSE:T) and Verizon (NYSE:VZ) that have put caps on their data plans. iPhone users are known to be junkies, using more data than other smartphone users. This could help Sprint reverse the declining subscription rates at the third largest U.S. carrier.

Our $4.75 price estimate for Sprint stock is about 40% above market price.

Sprint could attract more subscribers..

Unlimited data plans attract mobile subscribers as it helps them access the Internet, share photos and watch videos without worrying about escalating data bills. If Sprint does indeed offer the iPhone with an unlimited data plan, it will help the company lure heavy iPhone data users who may eventually defect from Verizon or AT&T’s networks, especially as AT&T’s service is well known for dropping calls.

Sprint’s share in the U.S. mobile subscriber market has been declining over the last few years and having the iPhone will help the company gain more subscribers and therefore improve its market share.

..And hurt Verizon and AT&T

Verizon and AT&T enjoy higher revenues through iPhone users as iPhone users are generally considered to be heavy data users. If Sprint could manage to attract iPhone users away from Verizon and AT&T, it will not only hurt their market share but also ARPU levels. However, this will depend on how well Sprint markets this selling point.

See our complete analysis for Sprint stock here

1. Sprint Said to Plan Unlimited Data Offer With Apple’s IPhone, Bloomberg, September 10th, 2011 [↩]