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Sprint Promotes Phone Trade-in

Zacks Equity Research

The third largest telecom carrier in the U.S., Sprint Corporation (S) is providing customers credit worth up to $300 in exchange of an older phone under its Sprint Buyback Program. Underpinning the environmental as well as financial benefits of phone recycling, the company is offering a minimum credit of $20.00 in exchange of any phone regardless of its condition and carrier. The company aims to benefit from the ongoing trend of selling certified pre-owned phones at nominal prices representing a win-win situation for both the carrier and customers.

In the phone recycling market, Sprint remains an industry leader having repurchased 50 million used devices since the launch of Sprint Buyback Program in 2001. The company had generated savings worth $100 million for its customers. In 2012, the company reclaimed 4.4 million phones, while other mega carriers AT&T, Inc. (T) and Verizon Communications Inc. (VZ) had 3.1 million and 3 million phones reclaimed, respectively.

Given the increase in e-waste, which is caused by discarded mobile phones, phone recycling has become mandatory for end-life management. This would help in curtailing waste and protecting the environment. In such an event, it has become a responsibility of carriers to support this cause and at the same time generate substantial value through recycling reusable old devices. Presently, the Environmental Protection Agency estimates that 135 million mobile devices are dumped every year and only 10% of these enter the recycle market.

We believe that Sprint will curb environmental losses and attract more customers by through its phone buyback business. This will likely prove to be a lucrative addition to the company’s rich collection of smartphones including Android, tablets, USB modems, hotspots and routers, all of which are performing well in the market. In the third quarter, the company sold nearly 5 million smartphones which represented 92% of its post-paid sales.

Recently, the company added Samsung Galaxy Mega, HTC One Max and Nexus 5 on its network attracting customers to its 4G services. Sprint also activated over 1.4 million Apple Inc. (AAPL) iPhones in the third quarter, 40% of which belong to new customers.  The company is riding high on the demand for latest iPhone models – 5s and 5c – that are expected to support smartphone penetration in the future.   

Sprint has a Zacks Rank #3 (Hold).

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