Sprint is still holding strong with its free iPhone 7 promotions after T-Mobile and AT&T ended theirs over the weekend, and one reason may be that the carrier's promotion is more profitable than originally thought.

Conventional wisdom found that the free iPhone 7 promos represented around a $150-$200 loss per phone for the carrier. However, a research note from Wells Fargo Senior Analyst Jennifer Fritzsche noted Sprint's promo “maybe isn't losing as much money as many think… if any at all. In fact, we can make a case that [Sprint's] total recoverable amount for this device is $400 (at the low-end) to breakeven / profitable at the high-end,” Fritzsche wrote.

Two features of Sprint's position allow for that possibility:

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Sprint's relationship with Brightstar, the largest distributor of used handsets: Brightstar is owned by Softbank, Sprint's majority shareholder. This will allow it to maximize the secondary value of the iPhone 6 and 6s devices that users must trade in to get the free iPhone 7s. Fritzsche noted that in a recent conference, Sprint estimated the recoverable amount for an iPhone 6 at $200 and a 6s at $400 – higher than other carriers – for this reason. Sprint's use of a phone leasing plan: Unlike the other three carriers, Sprint's iPhone 7 promo signs users up for a 2-year leasing plan. That means that users won't own their devices, and at the end of the two years, Sprint can recover another $200 from the user – either from users returning the device or paying off the lease.

“Therefore, assuming a value of $200 - $400 at the front end and $200 at the back end of the lease – allows Sprint's total capture value to be in the $400 - $600 range,” Fritzsche wrote. “The key difference/advantage for Sprint is the last delta ($200 at the end of the lease or turn in of the phone) is unrecoverable for other carriers.”

Following the announcement of Apple's iPhone 7, the four major carriers in the U.S. – T-Mobile US, Verizon, AT&T and Sprint – all began offering aggressive promotions that one analyst called “unprecedented.”

Most promos didn't build the phones' payment into customers' service plans, they simply allowed customers to trade in an iPhone 6 that was paid off and get a free iPhone 7. Sprint's promo was the only one to lease the iPhone 7 instead of gifting it.

However, the promos won't be available for much longer, as all the carriers indicated the promos would be temporary. AT&T and T-Mobile already ended theirs, while Verizon and Sprint have not yet given an end date.

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