Sprint Outsources Billions in Network Operations to Ericsson

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In a a move to cut costs and improve its corporate balance sheet, telecommunications provider Sprint has announced a seven-year agreement to turn over operation of its networks to Ericsson. Dubbed Network Advantage, Sprint will pay Ericsson $4.5 to $5 billion over the term of the contract, and roughly 6,000 Sprint personnel will transfer to Ericsson as part of the deal.

“No other U.S.-based carrier has followed through on the business-enhancing vision inherent in Network Advantage,” said Sprint’s president of network operations and wholesale Steve Elfman, in a statement. “Our best-ever network performance will become even better by leveraging Ericsson’s world-class leadership in network services, their proprietary tools, and the knowledge of more than 30,000 dedicated and highly-specialized service professionals to power Sprint’s Now Network.”

In the announcement, Sprint emphasized that it will maintain ownership and control of its network assets, along with managing all network investment and strategy. Sprint will also continue to handle technical support and manage its relationships with its customers. Ericsson’s role with the Sprint network will be purely operational.

Sprint expects to see benefits from the relationship in short order, leveraging Ericsson’s 15 years of experience managing large-scale networks and carrier contracts that handle service for more than 275 million people around the world. Sprint expects Ericsson’s expertise will rapidly bring efficiency and scalability to Sprint’s operations, leaving Sprint itself in a more-nimble position to focus on innovation rather than the day-to-day toll of keeping its networks running.

Industry watchers have been expecting major U.S. carriers to look at outsourcing network operations to other companies, particularly given financial pressures caused by the current economic downturn. Sprint may have gone first, in part, because it has already been hemorrhaging subscribers and pouring money into building out 4G WiMax services.

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