You ASK him to PAY for the iphone... he drop it so he should pay for it.. you cannot just let he do it like that... what ever happened, ask him to buy 1 for you, even though he dun have the money, ask him to sell his old phone and collect money just to buy new iphone, he still ur friend but its ur phone that is drop, and remember that here in malaysia there no warranty for that(even if no drop and unlock, stil considered no warranty,huhuhuhu) but its ur iphone mate, ask him to buy 1 new phone for you and you gave him ur phone...

p/s: but if there no internal damage you can ask someone in forumer repair/change cover for you, but as i can remember, its expensive, but make sure ur friend PAY for it... if me i will ask him to buy new 1, even though there no internal damage....iphone is "MY precious" ooooOooooooOooo....like smeagol said in LOTR, "mY Precious"