While the value of the seven-year contract was not disclosed, it is known to be larger than Ericsson’s similar agreement with 3 Italy, announced in April. That five-year deal was valued at SEK 15bn ($1.9bn).
Following the announcement of the contract win, Ericsson’s share price rose over 4% to SEK 28 in trading on the Stockholm stock exchange.
Under the terms of the deal, Ericsson will assume responsibility for 3’s entire 3G network in the UK, as well as managing the operation’s IT infrastructure. However, 3 will retain ownership of the network and all IT assets.
As part of the deal, over 1,000 3 employees will transfer to Ericsson. Jacqueline Hey, managing director for UK and Ireland at Ericsson, told ComputerWire that the staff would be moved in one block before the end of the year, and said she is confident that Ericsson will be able to assimilate the newcomers quickly. The number of similar contracts around the world mean processes are in place to bring people in smoothly, she said.
While the deal is the first of its kind in the UK, Ericsson already has managed services partnerships with 3 in Italy and in Australia where it operates the company’s 3G networks and services platforms. In November last year, Ericsson also extended an agreement to deliver 3’s core, radio, transmission equipment and related services in the Nordic region. That three-year contract was valued at approximately SEK 2.6bn ($320m).
Ericsson’s services business accounted for 26% of the company’s total systems sales in full-year 2004. The company’s Global Services operation has a headcount of approximately 19,000 and grew 10% to SEK 31.1bn ($3.9bn) in 2004.
A series of acquisitions have driven Ericsson’s recent growth in the services space. Last month, the company acquired Australian systems integrator TUSC Computer Systems Pty Ltd for $7.1m. Prior to that, Ericsson had purchased the systems integration arm of wireless software vendor Teleca AB for an undisclosed sum, and French network integrator Audiolog SA.
