Virgin Mobile Users to Get iPhone in Second Prepaid Deal

Apple Inc. (AAPL)’s iPhone will be sold to prepaid customers later this month through Sprint Nextel Corp. (S)’s Virgin Mobile USA brand, marking the device’s second deal with a U.S. pay-as-you-go carrier in the past two weeks.

The company will offer the phone with prepaid plans of $30 to $50 a month starting June 29, according to a statement today. The iPhone 4S will cost $649, while the older iPhone 4 with 8 gigabytes will be priced at $549.

The agreement pushes the iPhone deeper into the prepaid market, making it available to more customers who don’t want to take on a two-year contract. Leap Wireless International Inc. (LEAP), another pay-as-you-go carrier, announced plans last week to offer the phone on its network. While Virgin Mobile is selling the phone for a higher price than Leap, which is offering the 4S for about $500, it has lower-cost monthly rates.

Sprint already offers the iPhone to contract customers, and the Virgin Mobile deal may help the company satisfy a $15.5 billion purchase agreement with Apple, said Brian Marshall, an analyst at ISI Group in San Francisco. The offer also may help the company compete against AT&T Inc. (T), the carrier that sells the most iPhones in the U.S.

Getting Traction?

“At $50 per month (versus comparable unlimited options from AT&T at $100-plus per month), we believe this could gain some traction among U.S. customers who are able to pay the upfront costs,” Marshall said today in a report.

Virgin Mobile customers also will be able to use their iPhone as a mobile hot spot for an additional $15 per month, providing Internet access to nearby devices.

Sprint, which acquired Virgin Mobile in 2009, runs the decade-old business as a separate brand. Virgin Group founder Richard Branson still serves as the public face of the company.

Sprint sold 1.5 million iPhones last quarter, helped by a $99.99-a-month unlimited calling-and-data plan that Verizon Wireless and AT&T don’t offer. The sales topped analysts’ estimates and helped narrow losses at the Overland Park, Kansas- based carrier.

The shares rose 0.7 percent to close at $2.74 in New York. Sprint’s stock has gained 17 percent this year.

To contact the reporter on this story: Nick Turner in New York at nturner7@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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