Sprint Nextel acquires next generation wireless infrastructure equipment to upgrade nationwide wireless network
Clients Sprint Nextel Corporation
Jones Day represented Sprint Nextel Corporation in its acquisition of next generation wireless infrastructure equipment to be used to upgrade Sprint's nationwide wireless network. The transaction involved the purchase of equipment and implementation services from Samsung, Alcatel-Lucent and Ericsson. The project includes the purchase of multi-modal base stations capable of supporting advanced 3G and 4G technologies (i.e., LTE and WiMax). The implementation of the equipment will take several years and upon completion, by many accounts, will result in Sprint having one of the most advanced wireless networks in the United States.
Sprint's projection of the total deal value is confidential. The total estimated incremental cost of the Network Vision program during the deployment period is between $4 billion and $5 billion. This deal is widely thought to be the largest single purchase of telecommunications equipment and services ever. Sprint estimates that the upgrade will save Sprint $11 billion over the next seven years in operating expenses by allowing Sprint to cut its roaming costs and eliminate cell towers that support Sprint's iDEN network.
One novel aspect of this transaction was the competitive bidding process whereby numerous potential providers participated in a real-time, electronic reverse auction. In consultation with Sprint, Jones Day created the initial terms and conditions, including all exhibits containing the product specifications, service levels and other business requirements, which were provided to all potential suppliers prior to the auction. Potential suppliers were instructed to bid to those terms and conditions. During the three-day reverse auction, potential suppliers submitted bids on various equipment and service components using an electronic auction tool. Bidders were allowed to see competitor's bids but did not know competitor's identity. Potential suppliers could then determine if they needed to bid lower to be more price competitive.