Sprint this morning announced a seven-year, $5 billion deal that hands responsibility for its network over to Ericsson, which certainly has been around the block once or twice. So as we're seeing the launch of new Windows phones on Sprint, the bullet points of what it means:
- Sprint retains full ownership and control of its network assets, and solely owns network strategy and investment decisions.
- Customers will continue to work directly with Sprint employees as their primary contact, as Sprint retains full control of the customer experience, customer technical support and services review.
- Sprint retains technology and vendor selections.
- Ericsson assumes responsibility for the day-to-day services, provisioning and maintenance for the Sprint-owned CDMA, iDEN and wireline networks.
That from the full press release, which you can also find after the break. Also of note is that some 6,000 employees will be transferred to Ericsson's control.
Dieter's done some additional analysis over at PreCentral.net (Sprint, of course, is the Palm Pre's only carrier at the moment), and that's where things get really interesting. The long and the short of it is that we may see a stronger network from Sprint in the future. And there may will have been something to the rumors of Sprint flirting with LTE technology and not just WIMAX for its 4G network.
And we're in full agreement with Dieter in that this makes Sprint even more of a middle man — remember that it spun off its WIMAX business to Clearwire and also sold a bunch of its towers and then leased them back. So Sprint's cutting a lot of its operating costs, while at the same time becoming less of a traditional carrier.
Stay tuned, folks. Things could get interesting in the coming months.
Sprint Gains Network Advantage: Innovative Network Services Deal with Ericsson Delivers Competitive Edge
OVERLAND PARK, Kan.--(BUSINESS WIRE)--Jul. 9, 2009-- NOTE: Sprint and Ericsson will host a conference call for financial and industry analysts and press on Thursday, July 9 at 1:30 p.m. EDT (12:30 p.m. CDT) at 1-800-938-1120 (U.S. and Canada) or 1-706-634-7849 (International). Participants must use the code: 19153438.
Sprint (NYSE:S) is breaking away from competitors today with a unique wireless and wireline network services agreement with global leader Ericsson (NASDAQ:ERIC).
The seven-year agreement, matching Sprint’s telecommunications leadership with Ericsson, enables Sprint and its millions of customers to enjoy a network services model that is proven successful worldwide and praised by business experts and communications analysts, as an operational best practice for network operators.
Sprint’s
[[ person ]] Steve Elfman, President of Network Operations and Wholesale, believes the historic deal, titled “Network Advantage,” catapults the company to elite status in wireless and wireline network effectiveness.
“No other U.S.-based carrier has followed through on the business-enhancing vision inherent in Network Advantage. 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,” said Elfman.
The move delivers operational efficiencies for Sprint while further expanding Ericsson’s network services business in North America. The agreement, with an option for renewal, will result in payments for services valued at between
[[ money ]] $4.5 billion and $5 billion (USD) over the seven-year term of the contract. The transaction calls for about 6,000 Sprint employees to begin performing their network functions as Ericsson employees sometime in the 3rd quarter.
Key elements of Network Advantage are:
- Sprint retains full ownership and control of its network assets, and solely owns network strategy and investment decisions.
- Customers will continue to work directly with Sprint employees as their primary contact, as Sprint retains full control of the customer experience, customer technical support and services review.
- Sprint retains technology and vendor selections.
- Ericsson assumes responsibility for the day-to-day services, provisioning and maintenance for the Sprint-owned CDMA, iDEN and wireline networks.
- Ericsson will optimize Sprint’s multi-vendor inventory of assets such as spare parts and transmission equipment, and provide processes and tools for managing the national network platforms and operational support systems.
- The transferred employees will become part of Ericsson Services Inc., a wholly-owned Ericsson subsidiary based in Overland Park, KS, a move that retains jobs in the United States. No force reductions are currently contemplated as a result of this agreement.
“Ericsson is excited about the opportunity to expand our successful business model to the U.S., allowing Sprint to operate more efficiently while focusing even more on its customers,” said
[[ person ]] Angel Ruiz, head of Ericsson’s North American operations. “Managed Services has been successful throughout the world. Measures that provide operators with reduced cost and improved efficiency have become increasingly valid and attractive. This shows that the trend of full-scope Managed Services with tier-one global operators is now happening in the U.S. We’re looking forward to the skill and competence that the Sprint employees will bring to Ericsson.”
Elfman added, “Taking advantage of Ericsson’s global expertise to operate the tactical functions of our networks will greatly enhance Sprint’s business. Beyond the obvious network advancements, we’re now positioned to eclipse the competition by concentrating on our legacy of innovation – whether it’s revolutionizing the customer experience as we’ve done with Ready Now and our value plans, or delivering iconic, highly-sought-after products like Sprint Mobile Broadband Cards, the Palm® Pre™ and MiFi™. Further, our network powers Sprint’s one-of-a-kind wireline and wireless assets, such as our award-wining Unified Communications enablement, a robust integration of converged solutions that delivers unparalleled business mobility.”
Sprint expects to immediately benefit from Ericsson’s leadership and best-in-class economies of scale in network services. Ericsson was the pioneer with leading global carriers in Europe as well as AsiaPacific and Latin America (full reference list) for this type of partnership and has more than 15 years’ experience in the field with hundreds of carrier contracts. Ericsson today manages networks that together serve more than 275 million subscribers worldwide. Additionally, more than 40 percent of all mobile traffic goes through Ericsson’s networks. Its investments in best practices and tools will enhance Sprint’s business and bring scale and efficiency that will impact Sprint beyond what it could achieve as a stand-alone carrier.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
This news release includes “forward-looking statements” within the meaning of the securities laws. The statements in this news release regarding network performance and capabilities, business and network efficiencies, new products and services, and the business outlook and performance, as well as other statements that are not historical facts, are forward-looking statements. The words “estimate,” “project,” “forecast,” “intend,” “expect,” “believe,” “target,” “providing guidance” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are estimates and projections reflecting management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, customer and network usage; customer growth and retention; pricing; development, deployment and operating costs; availability of devices; the timing of various events and the economic environment. Sprint Nextel believes these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. Sprint Nextel is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this release. Sprint Nextel provides a detailed discussion of risk factors in periodic SEC filings, including its annual report on Form 10-K for the year ended December 31, 2008 in Part I, Item 1A, “Risk Factors.”
About Ericsson
Ericsson is the world's leading provider of technology and services to telecom operators. Ericsson is the leader in 2G, 3G and 4G mobile technologies, and provides support for networks with over 1 billion subscribers and has a leading position in Managed Services. The company's portfolio comprises of mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry. The Sony Ericsson and ST-Ericsson joint ventures provide consumers with feature-rich personal mobile devices.
Ericsson is advancing its vision "to be the prime driver in an all-communicating world" through innovation, technology, and sustainable business solutions. Working in 175 countries, more than 75,000 employees generated revenue of
[[ money ]] SEK 209 billion (
[[ money ]] USD 32.2 billion) in 2008. Founded in 1876 with the headquarters in Stockholm, Sweden, Ericsson is listed on NASDAQ OMX Stockholm and NASDAQ New York.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two wireless networks serving more than 49 million customers at the end of the first quarter 2009; industry-leading mobile data services; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. For more information, visit www.sprint.com.
