Sprint Nextel Plans to Upgrade Network, Save Billions

Sprint Nextel (S) announced today a plan to upgrade its network over the next three to five years, aiming to save billions of dollars in the process. The third largest U.S. mobile-phone carrier wants to enhance voice quality and data speeds and consolidate multiple network technologies into one seamless network, it said.

Sprint said it has awarded contracts to Alcatel-Lucent (ALU), Ericsson (ERIC) and Samsung Electronics for the project, each divided by geographical areas. Alcatel-Lucent will work on Sprint's network in the Boston to Washington corridor, as well as Los Angeles. Ericsson was assigned Atlanta and Miami among other cities, while Samsung was given Chicago, San-Francisco and other cities.

The companies are to implement "multimode technology" that should enhance coverage, quality and speed, and "create network flexibility, reduce operating costs and improve environmental sustainability," the company said. Starting 2013, Sprint will start phasing out the Nextel network. Sprint bought Nextel in 2005.

Sprint said it will spend between $4 billion and $5 billion to implement the plan, which will in turn create savings from reduced energy costs, lower roaming expenses, and improved capital efficiencies, among others. In all, over seven years, Sprint estimates the total savings to be between $10 billion and $11 billion. In addition, the per-unit cost efficiencies of serving Sprint customers should improve, Sprint said.

Sprint jumped 27 cents, or 6.89%, to $4.19 at 10:50 a.m. Year-to-date, shares have gained 14.5%.

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