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Sprint Nextel delivered the bad news to Convergys that it would be ending their long-term relationship in favor of Amdocs. However, Convergys re-affirmed its 2006 guidance.

Sprint Nextel will migrate off its legacy Precedent 2000 platform throughout 2006 and 2007.

In 2005 Convergys‘ Information Management Group (IMG) generated approximately $100 million in revenue from Sprint Nextel at profitability levels comparable to the average of the IMG business. Despite Sprint Nextel’s decision, Convergys remains comfortable with 2006 earnings guidance of at least $1.07 per share.

“We have served Sprint Nextel well in a variety of programs over a number of years and stand ready to support them in this transition,” said Dave Dougherty, president and chief operating officer of Convergys in a statement. “Though disappointed with this decision by Sprint Nextel, we continue to have confidence in IMG and the prospects for continued revenue and earnings growth across Convergys.”

Convergys and Amdocs have been battling for the Sprint business for the last few years as Sprint began to consolidate. In December 2003, Convergys signed an extended billing contract with Sprint and temporarily allaying fears it had lost the contract to Amdocs.

Last January during its fourth-quarter earnings call, Convergys said it extended its contract with Sprint to support the operator’s wireless wholesale billing. Convergys said Sprint would transition from an in-house system based on a competitor`s platform to an outsourced Convergys billing platform. Sprint also would license Convergys’ Infinys software to combine its rating activities.

At the time, commenting on the Sprint Nextel merger, James Orr, chairman, president and chief CEO of Convergys said, “While we can’t predict what decisions Sprint and Nextel will make, we believe the acquisition provides Convergys an important opportunity. We look forward to working closely with the combined company upon completion of their merger.”

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