Taking a big plunge into outsourcing, Sprint Nextel said today that it would outsource its wireless network operations to Ericsson in a deal valued at $4.5 - $5 billion.
As part of the seven-year agreement, about 6,000 Sprint employees will work for Ericsson Services starting in the third quarter. Rumors were swirling about Sprint Nextel planned to make the move to save money.
We've got a couple of Sprint Nextel speakers -- Russ McGuire, vice president of strategy, and Brian Huey, manager of open strategy -- appearing at MobileBeat 2009 next week, where it will be interesting to hear more details. Brian Huey, in particular, will present Sprint's view on what is good about apps and what can be bad about apps from a carrier view. This will mark the first time the industry's heard a carrier disclose such information.
The company is the first U.S. major carrier to outsource its operations to such a degree. Sprint Nextel will still own its iDEN and CDMA networks. It will determine its network strategy and investments. But now the company can tap Ericsson's 30,000 services experts and reduce its costs at the same time.
In a statement, Sprint President Steve Elfman, said that the network's performance is likely to be better as Sprint Nextel taps Ericsson's expertise. It will be interesting to see if this makes Sprint Nextel more competitive with Verizon and AT&T, both of which are larger carriers.