Sprint Nextel (NYSE: S ) still is the underdog of the telecom world. The
beleaguered carrier reportedly will begin selling the iPhone 5 starting in
October. Wall Street's response to the news first reported by The Wall Street
Journal was a quick jump (about 10%), followed by a gigantic yawn. In fact,
shares of the Overland, Kan.-based company were trading down slightly at $3.57
on Wednesday afternoon. Sprint has slumped nearly 16% during the past year,
underperforming rivals Verizon (NYSE: VZ ) and AT&T (NYSE: T ), both of which
are little changed. About 6 million iPhones are expected to be sold through
Sprint, boosting sales of the smartphone by 5% . This will help increase traffic
to Sprint stores and might help the carrier retain customers who might otherwise
have defected to rivals. But it is far from a certainty. Even though Sprint has
improved customer service and reduced its churn rate, it cannot ignore the fact
the smartphone market is getting more crowded by the day. Moreover, the vast
majority of the new customers Sprint added in recent quarters are from its
less-lucrative prepaid wireless business thus, they might not even be able to
afford the iPhone. In fact, the company lost 101,000 contract customers during
the past quarter. Besides, Sprint is late to the iPhone party. It is entering
the iPhone business just as many consumers are turning their noses up at the
device. Google (NASDAQ: GOOG ) Android-powered phones have been surging in
popularity, gaining market share at Apple's (NASDAQ: AAPL ) expense. Data from
comScore shows that Android's market share rose 5.1% to 38.1% during the
three-month period ending in May. Meanwhile, Apple rose 1.4 percentage points to
26.6%. The more intriguing question, however, is why Apple is bothering with the
No. 3 telecom company. Perhaps Apple CEO Steve Jobs wanted to lend AT&T a hand
to counter Sprint's claims that the $39 billion T-Mobile acquisition should be
blocked because it will harm consumers. After all, how could Sprint continue to
make that argument if Apple is allowing it to sell its latest and greatest
smartphone? Sprint CEO Dan Hesse, who is one of the leading voices against the
T-Mobile merger, will find that doing business with Apple isn't easy. A few
years ago, Media reports said AT&T paid Apple a $325 subsidy on each new iPhone
3G it sold. A Wall Street analyst says Sprint will have a steep price to pay, as
well. "Using a $350 subsidy, we
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