Following months of speculation, Sprint finally announced a deal with Ericsson to outsource its wireless and wireline network operations. The seven-year deal that could reach $5 billion sees Ericsson assuming responsibility for the day-to-day services, provisioning and maintenance for Sprint-owned CDMA, iDEN and wireline networks.

Sprint said it will retain full ownership and control of its network assets but 6,000 Sprint employees will be transferred over to Ericsson in the third quarter under the Ericsson Services brand.

It's no secret that Sprint has been struggling financially and bleeding subscribers. The move is seen as one that will help the operator cut costs while bolstering its marketing prowess and improving customer care since it doesn't have to focus on its network operations. Ericsson, while seasoned in the network management market globally, is taking on its biggest managed services deal to date with Sprint.

Analysts note the move was one that needed to be made in order for Sprint to survive in a cut-throat mobile market and a sagging economy. And a successful execution is critical to the company's survival. Meanwhile, the service provider community remains divided on whether to outsource their network operations to an outsider. Verizon Wireless' senior vice president and CTO said the operator has no desire to outsource its network operations to an integrator.

In a recent report, Strategy Analytics analyst Susan Welsh de Grimaldo indicated that Sprint will need to prove it can succeed as an operator solely focused on service offerings and customer relationships. "Recent improvements in customer relationship management and the launch of the Palm Pre are moving in the right direction, but the proof will be in growing net adds in high-revenue customer segments and stemming the tide of defections of the Nextel core customer segments in blue collar enterprises. Both tasks will continue to prove challenging, particularly in the face of the weak economy and strong performance at AT&T and Verizon Wireless in recent quarters," said de Grimaldo.

According to analyst firm Current Analysis, Sprint should work to re-assure its enterprise customer base that its "critical communications and information access requirements are in reliable hands" and that the operator should institute some unique assurances to its varying base of enterprise customers ranging from quantitative service level agreements to money-back guarantees, promotions or discounts.

For more:
- read the official release

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