Sprint Nextel is betting billions on the iPhone 4S, and now the No. 3 U.S. carrier is answering complaints that the massive data traffic being generated by the device is overwhelming its network. “We are looking into a small number of reports of slow data speeds when using the iPhone 4S, however there are also reports showing that Sprint’s network is the fastest, such as the Gizmodo report,” Sprint Nextel said in a statement. That preliminary test found Sprint Nextel’s service the fastest for iPhone 4S, with the second fastest downloads and fastest upload speeds. But Gizmodo continues to test, using submissions from iPhone 4S users, and as time goes on Sprint Nextel’s performance seems to be deteriorating. Its fastest speeds are comparable to those of AT&T Mobility and Verizon Wireless, but its average speed currently looks much lower than that of its larger rivals.
The iPhone 4S could be a lifeline for Sprint, but not if it can’t support the product. As part of its plan to manage data traffic, Sprint Nextel is trying to raise cash to build out and upgrade its network. But Wall Street lacks confidence that the company can increase market share and boost profits, so analysts expect that Sprint Nextel will need to pay double-digit interest rates in order to raise more funds.
Last Friday’s iPhone launch gave Sprint Nextel its best sales day ever, according to the company. Continuing that success by supporting the product will be critical for the carrier, which has reportedly committed to purchase 30.5 million iPhones at a cost of $20 billion. Earlier this month the Wall Street Journal reported that Sprint Nextel CEO Dan Hesse told his board that the carrier was unlikely to see a profit from the iPhone until 2014, presumably because of this large upfront investment. Even as Sprint Nextel customers were lined up outside stores on Friday, Moody’s Investor Service was downgrading Sprint Nextel’s debt on concerns about planned network upgrades and the investment in the iPhone. Today Fitch Ratings also downgraded Sprint’s debt.
On Tuesday some Sprint retail stores said they were completely sold out of the 16GB and 32GB iPhone 4S and did not know when they would get more. So the carrier is losing potential sales to Apple stores, which still have the phone.
