Ericsson scores network-outsourcing deal with Clearwire

Ericsson (NASDAQ:ERIC) scored a major, seven-year network-outsourcing contract with Clearwire (NASDAQ:CLWR) following in the footsteps of majority owner Sprint (NYSE:S), which made a similar $5 billion deal with Ericsson nearly two years ago.

The deal will see Clearwire transfer 700 employees to Ericsson and comes as Clearwire works to pare back costs and secure funding to continue its WiMAX network buildout. During the first quarter, the operator said it took $31.3 million in write-offs related to its abandonment of projects that no longer fit within its strategic network plans. In addition, Clearwire said it terminated certain tower leases.

Clearwire will retain ownership of all network assets and maintain responsibility for future network technology and strategic decisions. Ericsson, in turn, will be responsible for all network engineering operations and maintenance for Clearwire's core, transmission and radio access networks. Nothing will change with regard to Clearwire's infrastructure vendors, and Clearwire will remain the primary point of contact for customers, wholesale partners and vendors.

Ericsson spokesman Jimmy Duvall said the Clearwire employees will be transferred to Ericsson June 27, which is when the managed services contract will go into effect.

The deal is also interesting in light of the fact that Sprint CEO Dan Hesse acknowledged that Sprint has been talking to Clearwire about a network-hosting deal. "It also has been reported that there are some discussions between Clearwire and Sprint about the potential of Sprint hosting some spectrum. That's a potential that could happen. It's more economical for Clearwire to host it vs. building a separate network."

The choice of Ericsson also makes sense since it's believed the two companies will merge over time.

For more:
- read this FierceWireless article
- see this release
- see this Clearwire blog post

Related articles:
Hesse: Sprint has talked to Clearwire about hosting network traffic
Clearwire sees record revenues, but losses mount thanks to write-offs
Network outsourcing: Why the U.S. is an exception
Sprint inks $5B network outsourcing deal with Ericsson
Clearwire discontinues spectrum sale - at least for now
Sprint to pay Clearwire $1B over two years in revised wholesale partnership
Clearwire will halt branded smartphone plans, avoid new debt