Report: Sprint to cut $1B by moving towers to government-owned land, backhaul to microwave
Sprint (NYSE:S) is moving forward with plans of a "radical overhaul of its cellular network," according to Re/code, in a move that could save as much as $1 billion.
The carrier will relocate its towers from space leased from Crown Castle and American Tower to government-owned land where rent is cheaper, Re/code reported. The move could begin as early as June.
Additionally, Sprint is looking to trim backhaul expenses by moving away from fiber-optic cables owned by AT&T and Verizon, for which it pays roughly $1 billion a year. Instead, the company plans to use microwave technology to link its cell towers to telecom networks.
While microwave technology isn't widely used by U.S. carriers, Ericsson predicts that it will become the dominant backhaul by 2020, handling backhaul for 65 percent of cell sites. Microwave not only delivers improved capacity, according to Ericsson, but can be more viable financially than fiber in certain areas. Ericsson currently manages Sprint's network in a $5 billion deal the companies inked in 2009.
The moves are part of a broader effort by Sprint to slash costs by $2 billion to $2.5 billion. Sprint hasn't posted a profit since 2006, and CFO Tarek Robbiati has been working to cut expenses in an effort to reverse the company's financial slide.
Indeed, Sprint in December said it would take a $150 million charge for severance and other costs related to a round of layoffs expected to continue through this month.
"Every function is under scrutiny, whether it's finance or whether it's HR or whether it's legal," Robbiati said at an investor event late last year. "We have way too many overheads in the corporate office, in sales and marketing -- in marketing itself, we are not very good at targeting marketing expenditure that is giving us the biggest bang for the buck."
- see this Re/code report
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