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Sprint to Drop Two-Year Contracts, Following T-Mobile and Verizon

Sprint cuts two-year contracts: CEO 3:32

Sprint is abandoning two-year smartphone contracts -- and the subsidies that make device purchases cheaper.

By the end of the year, customers of the No. 4 wireless company will have to pay full price for their phones or spread the payments out by leasing the device. Sprint introduced that plan as an option last year.

Unbundling the service and the device costs will save customers money, Sprint CEO Marcelo Claure told CNBC's "Squawk Box" on Tuesday.

Related: Verizon Ditches Two-Year Phone Contracts and Unveils New Rate Plans

Two of Sprint's three major rivals already offer similar plans: T-Mobile got rid of the two-year contract two years ago, and Verizon announced a similar move this week. AT&T is now the only major carrier still offering subsidies.

Sprint also announced a new iPhone Forever plan, allowing customers to lease their phones for $22 per month, in addition to monthly service fee, and upgrade to new models as they become available.

In a move to provide access to the latest technology without having to wait for contract renewals, Claure said customers can bring in their old iPhone and get a new one. The $199 subsidized device is a thing of the past, he added.