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With more wireless competition looming, executives at Telus Corp. are believed
to be mulling a pricey swap of the firms network technology in a bid to offer
subscribers a bigger selection of mobile devices and grab a larger slice of
lucrative international roaming fees.
In the wireless equivalent of moving from Betamax to VHS, Telus executives are
considering NEW YORK (Reuters) Sprint Nextel Corp (S.N), the No. 3 U.S. mobile
service, plans to lay off several thousand of its 60,000 employees, the Wall
Street Journal reported on Monday.
Citing people familiar with the matter, the report said the scale of the job
cuts was not clear, but were expected to be in the range of a few thousand.
Sprint spokesman James Fisher declined comment.
Sprint has lost ground to rivals such as AT&T Inc (T.N) and Verizon Wireless,
owned by Verizon Communications Inc (VZ.N) and Vodafone (VOD.L), as it has
struggled with network and customer service problems.
Sprint Chief Executive Daniel Hesse, who took over the job in December, is also
considering consolidating Sprints headquarters in Kansas, the Journal said.
Sprint currently runs the business out of Kansas and Reston, Virginia.
In January 2007, Sprint announced plans to reduce its fulltime head count by
about 5,000 people, leaving it with just under 60,000 workers after the layoffs
were completed, according to Fisher.
While job cuts may help profit margins, analysts said that Sprint should be
careful where it cuts and should prioritize improving its operations to stem
customer losses or churn.
"Their issue has been more about their churn level, which has more to do with
network quality and the quality of the customers theyre bringing on," said RBC
Capital analyst Jonathan Atkin.
Sprint should be careful not to apply any job cuts to its customerfacing
operations, analysts said.
"Its probably prudent for them to employ fewer people. I dont think they can
afford to cut people in customer service," said Stanford Group analyst Michael
Nelson.
In the third quarter, Sprint lost highvalue customers who pay monthly bills and
said it was also hurt by the credit squeeze for subprime mortgage borrowers, who
often buy prepaid services that Sprint offers. Analysts say they expect Sprint
to post continued customer losses for the fourth quarter.
Aside from weak customer service, which Sprint has promised to address, the
company has also been hurt by technical issues from its 2005 purchase of Nextel
Communications. It has been running two separate networks since then.
Pacific Crest analyst Steve Clement said investors would be more impressed if
Hesse came up with a plan to move customers to Sprints CDMA network from the
iDen network that came with Nextel.
"The most important thing he can do is make whatever investments to shore up the
iDen base and transfer the customers there to the CDMA network as rapidly as is
feasible," Clement said.
Sprint has also been criticized for its plan to spend $5 billion on a building a
new highspeed wireless network based on WiMax, an emerging technology.
The companys shares have fallen about 37 percent in the last year. The stock
closed up 11 cents at $12.36 on Monday.
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Source: http://telephonyonline.com/external.html?q=http://www.washingtonpost.com/wpdyn/content/article/2008/01/14/AR2008011401613.html
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