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Virgin Mobile Users to Get iPhone in Second Prepaid Deal

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June 7 (Bloomberg) -- Apple Inc.’s iPhone will be sold to prepaid customers later this month through Sprint Nextel Corp.’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., 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., 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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