Sprint yesterday confirmed long-running rumours it is to transfer operation of its networks to Ericsson, marking one of the industry’s largest-ever and most significant outsourcing deals. The seven-year deal is worth between US$4.5 billion to US$5 billion and will see about 6,000 Sprint employees transferred to Ericsson from the third quarter. No job cuts are expected. Dubbed ‘Network Advantage,’ Sprint was keen to stress that the deal sees the US operator “retain full ownership and control of its network assets,” solely owning network strategy and investment decisions and continuing to manage the end-user experience. Meanwhile, Ericsson assumes responsibility “for the day-to-day services, provisioning and maintenance for the Sprint-owned CDMA, iDEN and wireline networks.”

Sprint’s decision to outsource should help it cut costs as the operator attempts to reverse its fortunes and overcome a reputation for poor customer service. Sprint declined to provide details on cost savings, but Philip Cusick, an analyst at Macquarie Securities, said he expected the network outsourcing and reshuffling of employees to amount to an annual saving of US$100 million. For Ericsson, the deal boosts its already prominent standing in what it calls the “managed services” space, and is the vendor’s first major deal in the US. It claims to be the market leader in the outsourcing space and manage networks that serve a total of more than 275 million subscribers worldwide. With almost 50 million connections, the Sprint deal is arguably the largest it has yet handled. Interestingly, an Unstrung report notes that Sprint rival Verizon Wireless – the largest US operator – has stated it will not go down the managed services route.