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Sprint loses out on major contract

March 30, 2007|From the Associated Press

WASHINGTON — Dealing a significant blow to Sprint Nextel Corp., the government Thursday awarded the largest-ever federal telecommunications contract -- a 10-year deal worth as much as $48 billion -- to Sprint rivals AT&T, Qwest Communications and Verizon.

The three contract winners will split $525 million, but beyond that they will have to compete with one another for the business of dozens of federal agencies that need to enhance the quality and security of voice, video and data technologies, the General Services Administration said.

Among the products federal agencies will choose from are Internet-based voice and video systems, wireless and satellite communications services and updated network infrastructure.

Several major departments, including Homeland Security and Treasury, have already signed on to the contract, although no specific deals are anticipated before summer.

The GSA announcement was a serious loss for Sprint Nextel, analysts said, because the Reston, Va.-based company has been providing telecom services to the federal government for nearly 20 years.

This year, Sprint announced thousands of job cuts amid service troubles, a dwindling customer base and difficulty assimilating Nextel Communications, which it acquired in 2004. Sprint shares are down about 20% from a year ago and the company is forecasting near-flat operating revenue and earnings this year.

"It's terrible for Sprint," said technology consultant Warren Suss of Jenkintown, Pa. "The federal government was Sprint's first major customer since the company started."

GSA officials would not say why Sprint lost out.

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