Sprint-Ericsson Deal Is a Win-Win, Strategy Analytics Says

Wireless carrier Sprint and telecommunications and infrastructure provider Ericsson recently announced a seven-year managed services deal for day-to-day operations of the operator's wireless and wireline networks. The $4.5-5 billion deal has been already analyzed by the research firm Strategy Analytics, and is considered to be a win-win partnership, although there are little chances that a similar cooperation will be announced in the near future by another carrier in the US.

“Sprint will remain in the strategic driver’s seat, so it is not giving away the keys, it is just hiring an experienced pit crew to keep its network tuned up while focusing its own efforts and investments on building a better network and a more competitive service and product portfolio,” notes Susan Welsh de Grimaldo, senior analyst in Strategy Analytics’ Wireless Network Strategies service. She adds, “Sprint cannot afford to lose more ground to AT&T and Verizon Wireless. By shifting the risk and responsibility for network performance and improvement of operational processes and efficiencies to Ericsson, Sprint can keep its eye on the finish line.”

According to the research firm, the Sprint managed services deal with Ericsson is the result of a trend to perform network improvements and to drive efficiency through the outsourcing of resources via network sharing. According to Phil Kendall, director of the Wireless Network Strategies service, more and more carriers understand that not the basic network operations are essential to their businesses, and that the customer service, brand, and attractive service and product offerings are those that matter most.

The deal will also offer Ericsson, a leader in managed services, the opportunity to reach the US market better. Although at first the company won't manage to gain profitability, it is expected to be “incentivized by credits for exceeding service level metrics,” to which the possibility to bid for other US network service projects will add. Moreover, the company will also have the opportunity to work on LTE along with Verizon Wireless while using Sprint employees that already have a background in the CDMA networks area.

Strategy Analytics' “Ericsson Managed Services for Sprint Network - A US First” can be found on the firm's website.