Analyst: Sprint's network modernization project could save $2B annually

Sprint Nextel's (NYSE:S) network modernization project will net the carrier up to $2 billion in annual savings, according to an analyst's estimate. 

In a Nov. 30 research note, Credit Suisse analyst Jonathan Chaplin wrote that Sprint will reap the $2 billion savings in maintenance and roaming costs. He estimated that the project, which is expected to begin early next year, will cost Sprint $6.5 billion.

Sprint has said that the project will take up to four years to complete. Sprint CEO Dan Hesse has said that the company hopes to select and announce a vendor partner for the project by year-end. A November report in the Wall Street Journal said that Alcatel-Lucent (NASDAQ:ALU) and Samsung were the two finalists, and that while Sprint had originally planned to award the contract to three vendors, it is now hoping to get lower bids from the finalists (Sprint's target range for the project is between $5 billion and $7 billion, the report said). Ericsson (NASDAQ:ERIC), which manages Sprint's day-to-day network operations, also is said to have bid for the deal.

"While investors will likely remain skeptical until the [upgrade] project is well underway, we believe the value creation possibilities will make Sprint increasingly difficult for value oriented [investors] to ignore," Chaplin wrote.

Through the project, Sprint reportedly plans to deploy a new, multi-mode base station that will give it the flexibility to add LTE services in the future. The company also plans to decrease the number of its cell sites from around 66,000 to 46,000 nationwide. Further, Hesse has said that, as part of the project, Sprint will eventually shut down service on its iDEN network, and will transfer CDMA service onto the 800 MHz spectrum it uses for iDEN.

Chaplin based his estimates, in part, on discussions with network engineers and consultants, including Atish Gude, who used to head strategy at Nextel and Sprint and was also Clearwire's (NASDAQ:CLWR) CMO until November 2009.

In another bit of Sprint news, the company confirmed that Daniel Dooley, who was formerly the president of Sprint Wholesale Solutions, ended his 14-year career at Sprint. He joined the data communication firm Transaction Network Services as president and general manager of the telecommunication services division.

For more:
- see this Forbes article
- see this Kansas City Business Journal article

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