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Sprint to Spend Up to $5 Billion to Upgrade Network

Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, will spend as much as $5 billion to upgrade its network in the next three to five years.

Sprint said today in a statement it has negotiated contracts with Alcatel-Lucent SA, Ericsson AB and Samsung Electronics Co. for the project, which will combine the carrier’s disparate bands of spectrum onto a single type of base station.

Sprint has separate equipment for its 800 megahertz and 1.9 gigahertz bands, and for the 2.5 gigahertz band it uses through its relationship with Clearwire Corp. for fourth-generation service. The upgrades will allow the carrier to use all three technologies and others on a single band.

The improvements open the possibility for Sprint to incorporate a competing fourth-generation technology, known as Long-Term Evolution, that both AT&T Inc. and Verizon Wireless will use. Sprint was the first to offer 4G service in the U.S.

“We can add different frequency spectrums or add different technologies to take full advantage of the spectrum we currently have, the spectrum that Clearwire operates and anything else that we may get over the next 10 years,” Bob Azzi, senior vice president of Sprint’s Network group, said in an interview.

The Overland Park, Kansas-based carrier said it expects to save at least $10 billion in seven years because of decreases in energy costs, roaming expenses and the number of cell sites, among other items.

Phasing Out iDEN

In 2013, Sprint will phase out the Integrated Digital Enhanced Network, or iDEN, it uses for push-to-talk service on its Nextel brand. Sprint will start offering in 2011 push-to- talk on its Code Division Multiple Access, or CDMA, network.

“The company is right in seeking to phase out its iDEN customer base and transition these customers to CDMA, freeing up that spectrum for possible 4G deployments,” said Tim Horan, an analyst at Oppenheimer & Co. in New York. “This will be a very lengthy process, so the benefits will not be seen for a while.”

Alcatel-Lucent will work on Sprint’s network in the Boston to Washington corridor, as well as Los Angeles. Atlanta, Dallas and Miami are among the markets for Ericsson, while Samsung’s include Chicago, Denver and Seattle.

Verizon Wireless, which is co-owned by Verizon Communications Inc. and Vodafone Group Plc, yesterday activated its LTE service in about 40 U.S. markets and AT&T has said it will begin offering the service by mid-2011.

Separately, David Einhorn, president of hedge-fund operator Greenlight Capital Inc., told CNBC in an interview that he had taken a long position in Sprint because of its potential for a turnaround.

Sprint gained 25 cents, or 6.4 percent, to $4.17 at 4:01 p.m. in New York Stock Exchange composite trading, its biggest one day jump since July 26. The shares have added 14 percent this year.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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