HELSINKI, Finland—Telfort, the Dutch subsidiary of U.K.-based MmO2, has entered a strategic agreement with Ericsson under which it will outsource all its mobile network operations in the Netherlands to the Swedish group.
Both parties to the letter of intent expect to sign a final agreement by 1 July next. Neither Telfort nor Ericsson were prepared to disclose the value of the deal.
The agreement marks the latest initiative by the Dutch mobile operator to reorganize operations and reduce overhead in the face of heavy third-generation (3G)-connected network building investments.
Ericsson described the agreement as a “landmark deal” for the company in the Netherlands. For its part, Telfort stated the outsourcing deal would result in the company accelerating the pace of the rollout of advanced multimedia products and services in the Netherlands, while playing an integral role in parent company MmO2’s plans to roll out a pan-European mobile data highway.
MmO2 intends to invest US$12 billion during five years in expanding mobile network operations across Europe. The total investment in equipment alone is expected to run to US$2 billion.
“The current market situation means that we can obtain very good terms from suppliers. We expect to save around US$50 million on equipment. Our ability to save is reflected in the eagerness of suppliers to do deals. It’s too early to say how favorable the terms will actually be,” said MmO2 Chief Executive Officer (CEO) Peter Erskine.
MmO2 was spun off from the BT Group last November. The company placed its equipment contracts under review at the end of 2001 in an effort to leverage its newly unified management.
Under the terms of the outsourcing agreement, Ericsson will assume all responsibility for daily network operations, in addition to planning, design and implementation. The network remains the property and under full control of Telfort. Ericsson was the lead equipment supplier to the Telfort network in the Netherlands.
