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Vendors Scrap Over Managed Services Deals

The increasing importance of managed services deals to operators and vendors became even more apparent today as two Orange (NYSE: FTE) operations and Vodafone Group plc (NYSE: VOD)'s U.K. business handed out multi-year deals to Nokia Networks and Ericsson AB (Nasdaq: ERIC) respectively.

While none of the parties involved in today's deals revealed the monetary value of the new engagements, today's contract news shows the extent to which operators believe they can cut their costs, and shows just how competitive the market is right now.

Vodafone slashes costs with Ericsson
Ericsson has bagged a seven-year deal to provide maintenance and operations for the 2G and 3G radio access networks of Vodafone UK , which has nearly 19.2 million customers. About 350 Vodafone staff will transfer to Ericsson at the beginning of May. (See VOD UK Outsources to Ericsson.)

A Vodafone spokesman told Light Reading the deal will cut 25 percent from its annual maintenance and operations costs during the course of the deal, though he wouldn't provide a figure for the current costs.

Vodafone UK's CTO Jeni Mundy is quoted in Ericsson's press release as saying the deal will provide "real operational and financial benefits allowing us, over time, to reinvest savings in delivering new products and services for customers."

Ericsson joins Alcatel-Lucent (NYSE: ALU) as a supplier of managed services to Vodafone UK. In May 2008, AlcaLu landed a five-year deal to carry out maintenance and operations on the operator's Intelligent Network & Core Applications (INCA) platforms. (See AlcaLu Wins at VOD UK.)

The news isn't so good for the Swedish giant in southern Europe, though.

In Spain, NSN replaces Ericsson
In the Iberian peninsula, France Telecom's Orange Spain , which has 11.3 million mobile and 1.2 million fixed broadband customers, has awarded a five-year deal to NSN to manage its fixed and mobile networks. The contract began on Jan. 1 this year. No financial terms have been released, though NSN says it is not taking on any Orange Spain staff as part of the deal.

NSN tells Light Reading it will "implement an end-to-end managed services solution, covering network deployment, monitoring, maintenance, design and optimization services of the mobile and fixed multi-vendor network to increase its efficiency and reliability." It will also "assume the responsibility of the spare parts flow from different vendors."

And there are a lot of vendors. NSN also says it "will be operating in a complex multi-vendor environment, as the Orange network consists of equipment supplied by 29 different vendors, with over 2,000 Value Added Services (VAS) platforms."

NSN also says it's "swapping out the incumbent managed services provider," though didn't name that incumbent.

A quick check into yesteryear reveals that incumbent is Ericsson: In November 2003, Amena, the Spanish mobile services operator that was acquired by France Telecom in 2005, announced a six-year managed services deal with Newtelco Services, a joint venture operation majority owned (75 percent) by Ericsson. (See FT Takes on Telefónica.)

Check out this press release for more details on the Newtelco managed services deal.

Ericsson says that deal transferred from Amena to Orange Spain and is due to be complete at the end of 2009, and that it couldn't comment on what would happen after that. Orange had not responded to calls or emails as this article was published.

NSN also scores in the U.K.
NSN has also landed a managed services deal to "manage, plan, expand, optimize and provide maintenance services for the Orange UK 2G/3G mobile network for the next five years. The deal aims to deliver improved quality of service and enhanced coverage for Orange UK’s 15.9 million mobile subscribers, while driving operational efficiency."

The vendor is also in the process of sub-contracting maintenance services for the network to a local partner. About 470 staff will transfer from Orange UK, with about 230 joining NSN and the remaining 240 will join the maintenance sub-contractor.

The deal involves responsibility for "network planning and optimization, spare parts management, and… network rollout services" for the carrier's 2G and 3G infrastructure, while Orange UK, which has nearly 16 million mobile customers, will "continue to own and strategically plan its network."

Fierce competition
Competition to land so-called managed services deals, where a vendor is contracted to perform outsourced network operations and management tasks on behalf of an operator that's looking to cut its operating costs, is fierce, with AlcaLu, Ericsson, and Nokia Siemens Networks (NSN) the most prominent vendor players for the major deals. Other vendors, such as Ciena Corp. (NYSE: CIEN), ECI Telecom Ltd. , Huawei Technologies Co. Ltd. , and Nortel Networks Ltd. , are also active, some with bespoke, tailored services. For example:

— Ray Le Maistre, International News Editor, Light Reading

welovedoves 12/5/2012 | 4:08:33 PM
re: Vendors Scrap Over Managed Services Deals It was on the goodreason website. They also have Ericsson kit lost by UPS!
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