Sprint Nextel (S) is making an interesting move as it continues to turn around its mobile phone business: The company is transferring 6,000 employees to an Ericsson (ERIC) subsidiary to manage “day-to-day services, provisioning and maintenance” of its wireless and wireline networks.
Sprint will maintain ownership of the networks, but will pay Ericsson $4.5 billion to $5 billion over the seven-year contract to run them.
Sprint says no layoffs are “currently contemplated” and that the deal will provide “operational efficiencies.” This means that Sprint will be freed up to worry about other aspects of its turnaround, such as marketing, customer retention, etc.
Assuming there are significant cost savings here, and that Sprint really can use the extra strategic bandwidth to figure out how to start growing again, this makes sense.
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