Sprint Nextel Corp., the third-largest U.S. wireless carrier, plans to pay Ericsson AB as much as $5 billion to manage its networks, offloading the expense of running its own systems.
About 6,000 Sprint employees will move over to Ericsson in the third quarter, the Overland Park, Kan.-based company said. Sprint retains ownership of the networks under the terms of the seven-year agreement.
Ericsson, Stockholm, Sweden, will manage and maintain both wireless and wireline systems for Sprint, including the iDEN push-to-talk network.
Sprint Nextel’s iDEN cellular network supports Nextel Direct Connect, the company’s proprietary walkie-talkie technology. To allow for push-to-talk functionality on CDMA networks, Sprint Nextel licensed technology from Qualcomm Inc.
In 2007, McLeod Software, Qualcomm and Sprint Nextel cut a three-way deal that allowed McLeod to run a mobile version of its truck dispatch software on certain phones connected to Sprint Nextel networks.
Sprint Nextel said that outsourcing its network operations will allow the unprofitable wireless carrier to focus on customer service and new product initiatives.
The company lost $2.8 billion last year and took a massive $29.6 billion loss in 2007 on a goodwill writedown related to Sprint’s acquisition of Nextel Communications and Nextel Partners in 2005 and 2006.
