Sprint May Outsource Network Operations To EricssonSprint May Outsource Network Operations To Ericsson

Sprint Nextel is reported to be close to finalizing its long-running negotiations with Ericsson to outsource part of Sprint's networking operations even though Ericsson has dropped its WiMax R&D work.

The cost-savings move to outsource key parts of Sprint's networking operation first surfaced in Kansas City business circles and publications in February after former Ericsson CEO Sven-Christer Nilsson joined the Sprint Nextel board late last year. Ericsson is a global provider of wireless networking infrastructure. It is currently focusing on Long Term Evolution technology, which will likely be utilized by Sprint and most global carriers in the future. In addition to its LTE and WiMax technologies, Sprint's Nextel unit utilizes yet another technology for Nextel's iDEN network.

Sprint has been losing mobile phone subscribers for several quarters as it struggles to meld Nextel, which it acquired several years ago, into its business model and as it works to launch its Clearwire WiMax operation. Sprint owns 51% of Clearwire, which is rolling out the WiMax wide area high-speed wireless technology in several U.S. cities by year's end.

If the Sprint-Ericsson deal goes through, several thousand Sprint employees are expected to be transferred to Ericsson, according to media reports. At the same time, Sprint has announced it has been moving to lay off a few thousand employees. Those earlier layoffs were not connected to any potential deal with Ericsson.

Any deal with Ericsson would likely save money for Sprint, which has been losing money and subscribers in alarming numbers since it acquired Nextel in 2005. Last year, Sprint said it would raise $670 million in cash by selling some of its cell towers to TowerCo. On Monday, Sprint said it lost $594 million in its latest quarter.

In the latest report on the Sprint-Ericsson negotiations, The Wall Street Journal on Monday said the negotiations were in final stages. Sprint has declined to discuss the various reports of its negotiations with Ericsson.

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