Ericsson inks 5-year managed services deal with VimpelCom

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Ericsson signed a five-year deal with Russian operator VimpelCom to manage its fixed and mobile networks in Siberia and the Urals. The contract calls for the Swedish equipment vendor to support more than 10,000 base stations and 10,000 kilometers (around 6,200 miles) of fibre-optic lines for VimpelCom starting in April.

While Ericsson declined to announce a value for the contract, it said the deal was the company's first major managed services deal in Russia.

"The traditional driving force for deals like this is the operating expenditure savings, but beyond the savings common in these deals there's also the increased network quality and the competence in the new technology," Ericsson's head of managed services Valter D'Avino said in a phone interview with Bloomberg. He added that typically these deals can save an operator about 20 per cent in operating costs. "This is huge growth in the market."

The contract will lead to around 400 VimpelCom staff moving over to Ericsson, as the company admits that its agreement with Ericsson is part of a plan to cut costs and reduce debts.

"The transfer of network maintenance and support to Ericsson will allow us to more effectively optimise costs and network management," Anton Kudryashov, VimpelCom's general director, said in a statement

Last year, Ericsson's managed services revenue expanded 16 per cent while its infrastructure equipment sales fell 11 per cent, according to Bloomberg.

The deal with VimpelCom comes shortly after Ericsson announced it had secured a $1 billion services contract from India's Reliance Communications. Under that eight-year deal Ericsson will operate and manage Reliance's wireline and wireless networks in the northern and western states of India. Around 5,000 Reliance employees will transfer to Ericsson.

For more:
- see this Ericsson statement
- see this Bloomberg article
- see this Reuters article

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