France Telecom and Deutsche Telekom have announced the set-up of a 50/50 joint venture to combine their procurement activities of customer equipment, network equipment, service platforms and IT infrastructure.
They have signed a non-binding term sheet as…
France Telecom and Deutsche Telekom have announced the set-up of a 50/50 joint venture to combine their procurement activities of customer equipment, network equipment, service platforms and IT infrastructure.
They have signed a non-binding term sheet as the basis for final contracts to be negotiated and signed in the coming weeks. The JV is expected to be set-up in Q4.
In a release, the operators said: “Suppliers will benefit through the harmonization of equipment and features that will enable them to streamline their development activities and further generate synergies and efficiencies.”
They said that Deutsche Telekom would save above E400m and France Telecom below E900m of annual run-rate after three years of implementation due to technology harmonisation and economies of scale.
The release added that savings from alignment for commercial benefit in network equipment in the first three years of operations would be balanced out.
“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 R. Kozel, Chief Technology and Innovation Officer of 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 harmonization,” he added.
“The new 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,” Olaf Swantee, Executive Vice President Europe and Sourcing at France Telecom said.
The two operational units of the JV will be based in Paris and Bonn and will be staffed with employees from their respective procurement departments.
Talks are currently held with unions and social partners regarding the necessary set-up processes.
The agreement will be subject to antitrust clearance.
The joint venture follows the announcement last February of exploratory talks between the two companies for potential partnerships in radio access network sharing in Europe, WiFi roaming, equipment harmonisation, M2M services and new growth business development.
France Telecom and Deutsche Telekom have been increasing their cooperation since June 2010 when they completed the merger of their UK subsidiaries, T-Mobile UK and Orange, which are now jointly known as Everything Everywhere, although both brands have been maintained.
Earlier this year, the two companies announced plans to share infrastructure in Poland and market rumours suggested that they could combine further infrastructure assets in Austria, Romania and Slovakia to cut costs.
