Telefónica confirms €1.78B UK smart meter deal

Telefónica has been officially awarded an €1.78 billion (£1.5 billion) contract to provide smart meter communications services in the UK, confirming a preliminary announcement on the deal in August.

The operator said the 15-year agreement represents the industry's largest M2M contract to date, and forms part of the Smart Meter Implementation Programme (SMIP) tender that will see 53 million smart meters installed across the UK by 2020.

Telefónica has secured the markets in the Central and Southern regions of the UK, winning two out of three regions in the tender launched by the Department of Energy and Climate Change (DECC). Its proposed communications solution is based on its O2 cellular network in the UK, backed up by the use of mesh technology to connect meters in areas without cellular coverage.

Telefónica signed the contract with Smart DCC, a part of Capita, which will manage the smart metering service on behalf of its users as well as the data and communications service providers. The DECC said a data and communications contract worth around £175 million over 12 years has been awarded to Smart DCC.

The DECC issued a statement confirming the Telefónica contract and also revealing the other contract winners. CGI IT UK has signed a contract with Smart DCC as the data service provider, and the estimated value of this contract over eight years is about £75 million. Arqiva Smart Metering has signed a contract with Smart DCC as the communications service provider for the North region, in a deal worth £625 million over 15 years.

Finally, Gemserv has signed a contract with the Smart Energy Code Company to develop and maintain the Smart Energy Code. The estimated value of this contract over four years is £10 million.

Telefónica said the £11 billion programme is expected to deliver a net benefit to the UK of £6.7 billion through reduced energy consumption and more efficient management and deployment of energy across the country. It is estimated that a smart meter enabled industry could save 2 billion tonnes of carbon dioxide emissions per year in 2020.

The operator unveiled its smart metering platform in February this year, integrating M2M communications with metering infrastructure management to aid the deployment of smart meters. The company has previously stressed that M2M is a key focus area for Telefónica Digital, the division formed to drive Telefónica's transformation into a "digital telco."

For more:
- see this DECC release
- see this Telefónica release

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