NEW YORK (TheStreet) — Sprint (Stock Quote: S) shares surged Tuesday on speculation that the No. 3 telco will be selling the Apple (Stock Quote: AAPL) iPhone this fall.

The stock closed up 10% Tuesday as investors cheered a report that Sprint would have the iPhone sometime in October, according to the Wall Street Journal, which cited two people.

The news comes as Apple is expected to be preparing two iPhone models for the holidays. The first is the iPhone 5 world phone; the second is a stripped-down iPhone 4 that could be sold by telcos as a giveaway in exchange for a two-year contract.

Sprint has struggled with customer defections for the past three years as users fled to other carriers. Part of the exodus was the draw of the iPhone at Verizon (Stock Quote: VZ) and AT&T (Stock Quote: T). Sprint has about 50 million subscribers, which is nearly half the size of No. 1 player Verizon.

For Apple, Sprint would be yet another outlet for the popular phone. If there is a cheaper version of the iPhone, Sprint's Boost Mobile unit could end up with a hot seller for the Christmas season.

After closing regular trading up 10% at $3.59 Tuesday, Sprint was up another 1% in the after-hours session.

—For all the latest news on Apple's superphone, check out MainStreet’s “iPhone” topic page for our latest coverage!

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