Report: Sprint May Outsource Network Management to Ericsson

Sprint is looking to outsource the management of its mobile network to Swedish telecom vendor Ericsson, according to a Wall Street Journal report Monday.

Discussions are entering the final stage and would result in 5,000 to 7,000 U.S. employees moving to Ericsson, according to the report.

Just like traditional outsourcing, the plan is all about cutting costs, something that Sprint is in dire need of doing. The company reported its first quarter results on Monday. Net losses increased by 18 percent compared to the same period last year, ending up at US$594 million. Net operating revenue was US$8.2 billion, a 12 percent drop compared to the first three months of 2008.

Sprint could end up paying Ericsson $2 billion over a number of years and in the process cut network costs by about 20 percent, according to the Journal.

Managed services has become an important part of Ericsson's business. The segment grew by 34 percent year-over-year, compared to total sales that grew by 12 percent in the first quarter, Ericsson reported on April 30.

Previously this year, Ericsson signed deals with, for example, T-Mobile and 3 for their shared 3G network in the U.K., and with Vodafone UK. The total number of subscribers in networks managed by Ericsson is 275 million, it said in a statement.

Competitor Nokia Siemens has contracts that serve more than 190 million subscribers globally, it said in March when it announced deals with Orange in Spain and the U.K.