In case you hadn’t noticed, Sprint’s (NYSE: S) stock is having a rough week.
Panicked investors sent shares plummeting 35% following an investor meeting in New York City on Friday.
At the meeting, Sprint told shareholders that the company’s plan to roll out its own 4G network – rather than acquire its primary network provider, Clearwire (Nasdaq: CLWR), as originally planned – would cost a whopping $10 billion through 2013.
And to make it happen, the company needs to borrow cash.
So investors’ reactions to the news wasn’t surprising. Especially as volatility continues to escalate.
The question is, does this situation represent a strong value play, or is Sprint just a falling piano?
I’m going with the former. Here are four reasons why…
Reason #1: Sprint Finally Snags the iPhone
As Apple (Nasdaq: AAPL) debuted the iPhone 4S, it announced that Sprint is finally on tap to carry the new device.
Sprint agreed to shell out $20 billion on 30.5 million iPhones over the next four years. Which works out to about $655 for each device.
But after you factor in two-year contracts at around $80 a month, it gives Sprint the opportunity to pull in $1,920 per subscriber, just from service contracts (before costs).
So in the end, the company should be rewarded for taking a hit upfront – as long as it can sell enough devices.
That shouldn’t be a problem, though. According to All Things Digital, Sprint already sold out of its pre-order stock for the entry-level (16 gigabyte) iPhone 4S.
Reason #2: Unlimited Data
Sprint’s the only major carrier in the United States that still gives subscribers the option to consume as much data as they want without getting penalized.
Since no one likes getting nickel and dimed, you can bet this will continue to push those notoriously data-hungry iPhone buyers into Sprint’s welcome arms.
Reason #3: Double Agent
Sprint’s not the only carrier to offer the iPhone and Android smartphones under the same roof. But it is the only official Google partner among them.
So not only can Sprint cash in as Apple loyalists continue to buy new iPhones year after year, it’s best positioned to benefit as Android’s popularity continues to build momentum, too.
Reason #4: Hitching a Ride on This Hypergrowth Trend
Sprint just teamed up with IDEAL LIFE – a remote health monitoring company – to develop wireless kiosks for users to receive a quick medical checkup on the go.
Basically, the devices will measure information like blood pressure, blood glucose levels and weight. All the information gathered in the kiosks will be sent to healthcare professionals using Sprint’s wireless networks.
For Sprint, this means staking claim to the rapidly growing telemedicine industry, which is expected to jump 500% to $24 billion by 2016.
Bottom line: Although Sprint’s recent decisions have investors on the run, its expansion into the rapidly growing telemedicine market and its new iPhone offering should help the company stay afloat in the coming months.
And once these new revenue streams start driving profits higher, shares will ultimately follow suit.