In announcing plans to renew a portion of its network management agreement with Ericsson, Sprint said it will take on some employees from the vendor
Sprint said it plans to renew a portion of its set-to-expire network management agreement with Ericsson, with the carrier taking on some current Ericsson employees as part of the move.
In a blog post, Sprint CTO John Saw wrote that the carrier plans to assume control over Network Service Assurance, with Ericsson continuing to provide “some multivendor services that support the ongoing operations and development of our network.” With the new agreement, Saw noted that “some Ericsson employees will transition to Sprint, while others will remain with Ericsson.”
The current agreement, which was signed in 2009, is set to expire in September. The seven-year, $5 billion deal was the largest for Ericsson at that time and called for the transfer of approximately 6,000 Sprint employees to the vendor partner.
Ericsson also is core to Sprint’s intrusive Network Vision program, which includes the vendor both participating in deploying new network equipment and overseeing work done by other vendors on the project.
“We’ve been clear that we’re going to do things differently at Sprint,” Saw wrote. “And we have very aggressive goals to lower costs while at the same time improving our network and executing our densification and optimization strategy. With our diverse toolkit of innovative cell site solutions and our deep spectrum holdings, we’re very confident in our ability to drive network improvements while reducing costs. Being closely connected to our network and our customers is a key aspect of Sprint’s turn-around strategy. Therefore, this is the right time for Sprint to take on more direct responsibility for its operations.”
Sprint management hinted earlier this week about its intentions to take a greater role in network management, with CEO Marcelo Claure saying the carrier is looking to bring more control in-house in order to better oversee operations.
Sprint shocked many when earlier this year it announced plans to cap network spending at around $3 billion, which is nearly half of what the carrier had been spending yearly on capital expenses. The carrier spent just $376 million on wireless capex in its latest fiscal quarter, with Claure noting the carrier is being very careful with capex in a move to garner a better return for shareholders, adding the carrier has over the past several years been a significant investor in capex, which allowed the carrier to begin cutting back while not impacting network performance.
The move also could see an impact at Ericsson, which this week lost its long-time CEO Hans Vestberg who left the company abruptly after seven years of leadership and 28 total years with the vendor. The company cited a change in strategy, with plans for a greater focus on “5G” the “internet of things” and cloud platforms.
Ericsson reported an 11% year-over-year drop in second-quarter sales reporting sales declines for all three of its business units: networks, global services and support solutions. Despite its recent focus on cost control, Ericsson saw its operating margin slide nine basis points to 32.3%. Coupled with the decline in sales, the lower margin meant operating income fell 22% year-on-year to $326 million for the quarter.
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