Sprint Nextel Corp said on Thursday that its Virgin Mobile prepaid business would start selling Apple Inc's iPhone later this month, pitching it against smaller prepaid rival Leap Wireless International Inc.

Sprint, which already sells the device to its contract customers, said that the expansion to its Virgin brand would help it reach its volume commitment with Apple without hurting its earnings.

Virgin customers, who do not commit to a contract and pay for calls in advance, will face an iPhone price tag that is 2-1/2 times that paid by Sprint's contract customers, who get a big discount on the device in exchange for committing to a two-year contract.