Telefónica is having buyer's remorse about Hewlett Packard Enterprise as the lead technology provider and systems integrator for its "Unica" network virtualization program: The service provider has cancelled its contract with HPE and has re-issued its tender.

It's a huge blow for Hewlett Packard Enterprise 's ambitions in the comms market, but it has a chance to redeem itself as it is allowed to submit a fresh bid.

The appointment of Hewlett-Packard (as it was then) as the lead vendor partner for Telefónica SA (NYSE: TEF)'s ambitious, multi-vendor Unica virtualization project was big news when it was announced at Mobile World Congress in March 2015, as Telefónica is a leading and highly influential network operator inits SDN, NFV and telco cloud strategy. (See Telefónica Unveils Aggressive NFV Plans.)

The decision to ditch HPE and start the process again, confirmed to Light Reading by the Spanish operator, shows just how hard it is going to be for large telecom operators to find partners that can fulfill their requirements and help build an open, non-proprietary next generation network.

Telefónica wants a lead integrator that can bring IT and telecoms expertise, integration know-how, work with other suppliers to develop an interoperable, virtualized infrastructure and even supply some of its own New IP technology. (The recent NFV interoperability test results published by Light Reading show how hard it is to get multiple vendors' NFV technology to work together -- see EXCLUSIVE! NFV Interop Evaluation Results.)

Telefónica's decision is a massive setback for HPE. Being awarded the prime role as integrator and as the supplier of its OpenNFV platform stack (comprising server, software, orchestration and networking technologies, including its HP Helion OpenStack system) was a major coup for HP when the Unica deal was announced at Mobile World Congress in March this year. (See Telefónica Taps HP for Unica NFV and Telefónica Selects HP OpenNFV Platform for UNICA Infrastructure.)

But HPE clearly bit off more than it could chew: Telefónica's decision that the IT and networking giant wasn't up to the job will call its virtualization and integration credentials into question. The Spanish operator declined to elaborate on the reasons for its decision to seek a new lead partner but industry chat suggests that HPE was unable to deliver on its promises, particularly in relation to delivering a multivendor, open architecture that would allow Telefónica to introduce or swap out virtual network functions from new or different vendor suppliers with the minimum of integration effort. Instead, HP was focusing on its own products for the projects.

The rejection from Telefónica would be a big deal at any time, but it's particularly bad timing now, as HPE is getting a fresh start in the world. The company was Hewlett-Packard at the time of the contract award. It split in two on Nov. 1, with Hewlett Packard Enterprise taking the IT, cloud and networking business and HP Inc. (NYSE: HPQ) the PC and printer business. (See Networking Shines in HP's Gloomy Final Earnings and HP to Split Into Two Companies.)

Should it wish to do so, HPE has the chance to atone as it is eligible to re-bid for the position it just lost. Somehow, though, it seems rather unlikely that Telefónica will give HPE a second chance.

Light Reading has contacted HPE for comment and is awaiting a response.

So the big question now is -- Who Might Replace HPE at Telefónica?

— Mitch Wagner, , West Coast Bureau Chief and Ray Le Maistre, Editor-in-Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected].