New York – Sprint Nextel Corp. on Monday said it will start phasing out the Nextel part of its network in 2013, a decision that follows near-constant subscriber losses since Sprint bought Nextel in 2005.
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Sprint had said before that it would eventually shut down the aging Nextel network, but hadn’t said when. It has about 10.6 million subscribers on the Nextel network, some of whom are using it under the Boost Mobile brand. Another 400,000 use phones that can access both the Sprint and Nextel networks.
Altogether, more than one in five Sprint subscribers use the Nextel network. Sprint plans to offer them Nextel’s signature push-to-talk function on the Sprint network instead.
Nextel’s fast, walkie-talkie-like push-to-talk function made it popular with outdoor workers such as construction crews. However, the network doesn’t support fast data transfers, making it unsuitable for smart phones. In 2009, Sprint made a push to use the network for cheap prepaid service, but it has shifted away from that strategy this year.
The phase-out is part of a network modernization plan announced Monday that will cost $4 billion to $5 billion. It is aimed at saving Sprint $10 billion to $11 billion over seven years. Sprint is hiring Alcatel-Lucent SA, LM Ericsson AB and Samsung Electronics Co. as the main vendor for the program.
Nextel’s network equipment and phones are supplied nearly exclusively by Motorola Inc., which invented the underlying iDEN technology.
Shares in Sprint, which is based in Overland Park, Kan., rose 26 cents, or 6.7 percent, to $4.18 in morning trading Monday.
Sprint, the third-largest wireless carrier in the country, has lost money in every quarter since 2007. Part of the reason is that it’s been saddled with the cost of running two incompatible networks, compared with its larger competitors, Verizon Wireless and AT&T Inc.