Sprint transfers management to Ericsson

OVERLAND PARK, Kan., July 10 (UPI) -- U.S. telecommunications giant Sprint Nextel said it would transfer management of its network operations to Sweden's Ericsson to cut costs.

The companies signed a seven-year deal worth about $4.75 billion, that allows Sprint continued ownership of the network, while Ericsson takes over maintenance of service and cell towers, The New York Times reported Friday.

"We own it. We're not selling it," said Steven Elfman, Sprint's president of network operations.

The deal includes the transfer of 6,000 Sprint workers, who will now work out of Ericsson's U.S. offices.

Telecommunications analyst Edward Snyder at Charter Equity Research said Sprint was forced into making a deal as it tries to carry the Palm Pre smart phone into the market.

"Sprint is doing this out of necessity. The Palm Pre they just released is costing them a pretty penny," Snyder said.

Analysts also said Sprint needed to convince its 50 million customers that Ericsson was up to the job of managing the network.

"It's a big deal for Ericsson that they've been trusted," said Roger Entner, an industry analyst at Nielsen IAG.

Ericsson already handles network operations for 275 million customers. The seven-year deal could save Sprint $700 million, Macquarie Securities analyst Philip Cusick said.