Telecoms companies connect to make savings

18 April 2011

18 April 2011 | Angeline Albert

FranceTelecom-Orange and Deutsche Telekom have agreed to combine purchasing activities to save €1.3 billion (£1.1 billion) after three years.  

A 50/50 joint venture between the brand owner of Orange and brand owner of T-Mobile will combine the companies’ procurement of customer and network equipment, service platforms and IT infrastructure.

Today the two groups signed a non-binding agreement with the final accord expected to be signed in the next few weeks, subject to company board approvals and antitrust clearance. The joint venture will be established in the final three months of this year.

Economies of scale and the harmonisation of technology is expected to result in €1.3 billion combined savings. 

The move is the result of talks between the two companies to identify potential areas of cooperation in radio access network sharing in Europe, Wi-Fi roaming and equipment harmonisation.

“Operators are expected to invest more than ever in networks and infrastructure as data usage increases exponentially and efforts to reduce the digital divide are being ramped-up,” said Edward Kozel, chief technology and innovation officer at Deutsche Telekom. “With France Telecom-Orange we have an experienced and trusted partner who shares the same approach regarding economies of scale as well as customer benefits in technology harmonisation.”

Olaf Swantee, the executive vice president for Europe and Sourcing at France Telecom-Orange, said: “The joint venture will offer a more efficient sourcing organisation that will lead to more effective partnerships with suppliers. This will enable us to drive innovation and shape the development of technology in a way that meets customers’ needs.”

The joint venture will have two operational units, one in Deutsche Telekom’s headquarters in Bonn and the other at France Telecom-Orange’s head office in Paris. Buyers from both groups with customer equipment, network technology, service platforms and IT infrastructure expertise will staff these units.

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