In an attempt to cut back on expenditures, Sprint Nextel Corp, the third-leading US wireless carrier, said Thursday that it will hand over the management of its wireless and wireline networks to Sweden-based telecom gear maker Ericsson.
The agreement, drawn out across a period of seven years, is valued at $4.5 billion to $5 billion, and is expected to help Sprint Nextel shed off the operating costs amounting to $8.7 billion in the Q1.
The company hopes to divert this sum in developing new products and improve network coverage and quality.
As a part of the deal, about 6,000 Sprint employees will be transferred to one of Ericsson’s auxiliary unit located at Sprint''s Overland Park, Kansas City, in the third quarter. Over 2000 of the staffs are currently based in the Kansas City area with the rests scattered across the country.
With this deal, Ericsson will manage all undertakings, including maintenance of service and cell towers, said Steven L. Elfman, president of network operations and wholesale at Sprint.
However, Sprint will continue to be reserve the ownership, added Elfman.
For a while, Sprint has been struggling with plunging subscribers for its wireless services and the global economic downturn, resulting in it announcing a slash in spending with over 8000 job cuts lined up for the year.
In 2008 alone, Sprint lost over 4 million contract customers to its larger rivals, drawn by Web-surfing devices like Apple Inc.’s iPhone.
The latest development at Sprint pushed its shares up by 17 cents, or 4 percent, to $4.46 at 4 p.m. in New York Stock Exchange.
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