Telecommunications infrastructure provider Ericsson said it has signed an eight-year managed services deal with Indian teleco provider Reliance Communications valued at $1 billion. The deal calls for Ericsson to operate and manage Reliance’s wireline and wireless networks in the northern and western portions of India.
Ericsson said it “will manage the day to day operations across wireline and wireless networks and will take over responsibility for field maintenance, network operations and operational planning of Reliance Communications 2G, CDMA and 3G mobile networks.” The company added that the deal will provide a cost savings to Reliance and that it plans to take on approximately 5,000 employees from Reliance.
The agreement will also include “defined service level agreement governance,” with Ericsson responsible for improving network performance and service quality leading to increased customer satisfaction and retention.
Ericsson signed a similar management agreement in 2011 with Indian operator Bharti Airtel that will see the company manage 70% of the carriers network in India.
Infonetics Research noted in a report last year that network outsourcing could represent a $76 billion opportunity by 2016. The firm found that Europe, the Middle East and Africa were leading the way in such arrangements.
“We anticipated that service providers across the board would continue to outsource at an unabated pace, but revenue in the first half of 2012 is already 2% higher than expected, with all [original equipment manufacturer] vendors reporting healthy growth in outsourcing, professional and managed services,” explained Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics. “This gives us pause to ask what would happen to some of these vendors if they didn’t have a presence in services.”
Domestically, managed services are still relatively sparse as carriers prefer to maintain stronger control over their network assets. Sprint Nextel and Clearwire have broken the mold, with both carriers having reached deals with Ericsson to manage their respective wireless networks.
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