Sprint Nextel’s Network Vision program added some important numbers today as the carrier announced the date it would terminate service across its iDEN network as well as a new credit facility to purchase equipment for the extensive network upgrade.
Sprint Nextel said its current iDEN service would be shuttered as early as June 30, 2013, a move that will free up spectrum resources in the 800 MHz band for its CDMA network and eventually its LTE operations. The carrier said it will send notices to business and government customers beginning this Friday regarding the planned shutdown, as well as offers to facilitate a transition to the carrier’s CDMA-based service that also offers push-to-talk capabilities.
The timing of the move coincides with a previous agreement with Motorola to continue supplying equipment and support for the iDEN network through 2013.
Sprint Nextel did note that customers using its PowerSource devices that rely on its CDMA network for traditional voice and data service and the iDEN network for PTT services would only lose the PTT function of that device. The carrier said it has already stopped selling iDEN devices in some channels, with plans to further limit sales over the coming months.
In addition to the freed up spectrum, killing off the iDEN network will remove capital needed to run that separate network that it acquired with the purchase of Nextel Communication in 2005. At the time of the $35 billion acquisition, Nextel served nearly 18 million customers on the iDEN network, a number that has since fallen to around 6 million.
While Sprint Nextel is looking to save operating expenses by turning down one network, the carrier said it has entered into a $1 billion credit facility with Deutsche Bank and a “syndicate of other banks” to finance equipment purchases from Ericsson. The facility, which is set to expire in March 2017, will be secured by a lien on the equipment purchased and guaranteed by Sprint Nextel.
Ericsson is one of three primary vendors of the $5 billion Network Vision initiative and is also on the hook for running Sprint Nextel’s network through an outsourcing agreement.
Sprint Nextel also reported today that it intends to redeem approximately $527 million of fourth quarter 2013 debt maturities totaling $1 billion on June 8. The securities come from Nextel’s 6.875% notes due in 2013.
Analysts noted that they expected Sprint Nextel to reach a similar financing arrangement with Samsung in the near term and that the carrier could use some excess capital to help fund Clearwire’s TDD-LTE rollout plans.
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