Some 750 E-Plus employees are set to transfer to Alcatel-Lucent as part of the six-year contract, which will see it take on responsibility for operating, maintaining and deploying E-Plus’ network, supporting some 12.7m million subscribers in Germany.
E-Plus said that it would maintain responsibility for strategic network planning and network development, including the selection of communications locations and technical equipment. However, it hopes that the deal will cut operating costs by tens of millions of euros and enable it to focus on core customer service activities.
Alcatel-Lucent is a late arrival in the network outsourcing space, and has considerable ground to make up on leaders Ericsson and Nokia. One industry analyst suggested that Alcatel-Lucent would had adopted very aggressive pricing in order to win the deal ahead of the market leaders.
Ericsson established its Global Services division in 2002, and has since won more than 100 contracts to manage operators’ telecoms infrastructure, supporting more than 100 million subscribers. The company has won deals with three (worth more than $2bn), MTN Group ($1.5bn), and India’s Bharti Airtel ($1bn), and revenue from what it classifies as professional services rose 30% in 2006 to SEK 32.3bn ($4.6bn).
Nokia Services forms part of the group’s Networks division, and claims to have close to 60 managed services contracts worldwide. The company has won network outsourcing deals with Bharti Airtel ($1bn), Russian operator MegaFon ($350m) and T-Mobile USA ($300m).
Both Lucent and Alcatel have been slow off the blocks to capitalize on the growing demand from mobile operators for third party vendors to manage their network infrastructure. Alcatel-Lucent’s Service Business Group was created in July 2006, and forms one of company’s three main divisions alongside its Carrier and Enterprise divisions.
John Meyer, the former head of outsourcing giant EDS Corp’s European business, was recruited to head up the Services Business Group, which pools together some 20,000 network services experts, and manages 50 networks from its ten operations centers with clients including Capgemini Energy and Telefonica Empresas.
