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Telefónica Outsources Pre-Paid BillingTelefónica Outsources Pre-Paid Billing

Spanish giant hands over management of its monster pre-paid billing platform to Ericsson and Spanish IT services firm Indra

July 21, 2010

2 Min Read
Telefónica Outsources Pre-Paid Billing

In what is a significant move for the managed services and Service Provider Information Technology (SPIT) sectors, Spanish giant Telefónica SA (NYSE: TEF) is handing over the management of its pre-paid billing platforms in 20 markets to Ericsson AB (Nasdaq: ERIC) and Spanish IT services firm Indra Sistemas SA in a seven-year deal. (See Telefónica Outsources to Ericsson, Indra and The SPIT Manifesto.)

About 500 staff at Telefónica I+D (the carrier's R&D and IT services unit), who currently run the pre-paid billing systems, will transfer to Ericsson and Indra in October this year. The transfer involves around 400 staff in Spain and 100 in Brazil.

The engagement covers 20 Telefónica operations that, collectively, support around 100 million customers. Ericsson says the deal is worth €500 million (US$640 million) during its seven-year term, with €300 million ($384 million) heading for Ericsson's bank account.

Ericsson, which says it supplies its Charging System pre-paid billing platform to more than 160 mobile operators around the world, sees this as an opportunity to "further develop and expand" Telefónica's platform with a view to "possible commercialization to other customers."

The deal further strengthens Ericsson's position as the global telecom managed services leader and heralds a new phase of outsourcing by operators that are looking to hand over the day-to-day management of their networks and support systems to third parties in an effort to reduce their operating expenses. (See Ericsson's Services Head Eyes More Growth and Ericsson Gets a Brazilian.)

News of Ericsson's deal comes only days after Huawei Technologies Co. Ltd. announced a managed services deal of its own in Spain. (See Huawei Wins Managed Services Deal in Spain.)

— Ray Le Maistre, International Managing Editor, Light Reading

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