AAPL Apple Inc

By Ryan Knutson 

Sprint Corp. and T-Mobile US Inc. are racing to outdo each other with iPhone discounts in advance of Friday's release of Apple Inc.'s latest handset.

Sprint said Thursday it would let customers lease an iPhone 6s for $1 a month, topping T-Mobile's $5-a-month offer, which it unveiled Wednesday. Apple's newest iPhone hits U.S. stores Friday.

The jockeying shows the importance both carriers place on the iPhone's latest release. T-Mobile is looking to sustain a two-year string of customer growth, and Sprint is hoping to end years of subscriber losses.

Whether the offers are actually a good deal depends on the circumstances of an individual consumer. Customers must trade in an iPhone 6 to get the lowest monthly pricing, and the only way to trade one in is to have it fully paid off. There are many places to trade in phones that could result in higher payouts. There are also pros and cons to leasing smartphones as well as installment plans that enable you to own your phone.

Even so, the marketing battle over who has even the appearance of cheapest plan is reaching new heights. After seeing T-Mobile's offer on Wednesday, Sprint Chief Executive Marcelo Claure told his team to come up with a better one, he said in an interview Thursday. Roughly 10 employees stayed up all night to get the $1 lease plan ready.

"We had no plan to do it," he said. "We got into a room, looked at the financials" and figured out a way to make it work, he said.

The offers will give customers an excuse to keep going to their wireless carrier for smartphones rather than directly to Apple, which unveiled its own financing plan this month. Apple's leasing plan, which includes a more robust warranty, starts at $32 a month and gives customers the freedom to switch carriers each year.

The country's largest carriers, Verizon Communications Inc. and AT&T Inc., have been much less aggressive in their offers. Neither leases phones, though each does offer installment payment plans. For the iPhone 6s launch, Verizon is offering up to $400 if a customer switches carriers and trades in an old phone and AT&T is offering up to $300.

Both Sprint and T-Mobile have a strong incentive to get customers using the iPhone 6s because the handset has new technology that will make it work better on their networks, said Jennifer Fritzsche, a senior analyst at Wells Fargo. T-Mobile has been adding low-frequency airwaves to its network that will result in better coverage inside buildings and in rural areas. Older iPhones don't work on that frequency, but the new iPhone 6s does. Sprint has been adding a technology called "carrier aggregation" that works only on the latest phones. Sprint customers with the newest iPhones in some locations will see much faster data speeds.

For both carriers, "the new iPhone should see noticeable improvements in network experience, which we believe is the impetus behind these recent moves," Ms. Fritzsche said in a research note.

Mr. Claure said even though the carrier is leasing a new iPhone 6s for $1 a month, there still will be a strong market for the older versions customers must trade in. Those used phones are directed to consumers with phone-insurance plans and sold to consumers overseas, he said.

Write to Ryan Knutson at ryan.knutson@wsj.com

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(END) Dow Jones Newswires

September 24, 2015 17:02 ET (21:02 GMT)

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