Sprint PCS signed a seven-year master service agreement with Ericsson Inc. for Code Division Multiple Access equipment, though the nationwide carrier has not committed to buying any infrastructure from the vendor.
“We have not committed to buying any equipment,” said Tom Murphy, spokesman for Sprint PCS. “They are another equipment option for us, and they are going to work on interoperability … It’s a signal to our other vendors that they are in the game.”
Ericsson, which embraced cdmaOne technology earlier this year by purchasing Qualcomm’s cdmaOne infrastructure division and licensing the technology, said the agreement allows Sprint PCS to use its compact radio base station and base-station controller products in expanding its nationwide network. Testing and integration of Ericsson’s cdmaOne equipment already has begun in Sprint PCS’ Interoperability Specification lab.
Analysts with Credit Suisse First Boston said the agreement signals that Ericsson has transformed Qualcomm’s infrastructure business into a major potential growth driver. Analysts have been less optimistic of Ericsson’s chances of significantly breaking into today’s cdmaOne infrastructure market since it entered the scene much later than other vendors.
Today, Lucent Technologies Inc., Motorola Inc. and Nortel Networks provide infrastructure to Sprint PCS. Sprint PCS’ strategy is to incorporate multiple vendors whose equipment can interoperate in order to drive down equipment costs and create strong competition among its vendors.
J.P. Morgan raised its price target on Sprint PCS last Wednesday to $130 per share. Sprint PCS’ stock closed at $91 at RCR press time Thursday. Sources close to Sprint PCS indicate the carrier has added 1 million subscribers so far in the fourth quarter. Sprint PCS declined to comment, but indicated in its recent third-quarter conference call that it expected to add 1 million customers during the quarter. Sprint PCS has led the industry in subscriber additions every quarter this year.
