Update: France Telecom and Deutsche Telekom partner for procurement venture

Update: France Telecom and Deutsche Telekom partner for procurement venture

France Telecom and Deutsche Telekom have agreed to merge their procurement activities that will leave the companies with a combined saving of €1.3 billion a year.

The two European leaders will merge procurement activities of customer equipment, network equipment, service platforms and IT infrastructure.

France Telecom and Deutsche Telekom say the venture will be a “new era in smart industry cooperation”. The aim is to not only save money but should allow each company to ensure their business is more competitive.

Olaf Swantee, EVP Europe and sourcing at France Telecom said: "By combining our procurement activities, our customers will benefit from the best networks, improved services and the widest choice of devices across our footprint."

The partnership will work by having two operational units in Paris and Bonn staffed by both telcos who already work within the departments mentioned.

Edward Kozel, chief technology and innovation officer of Deutsche Telekom said: "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." This joint venture allows both companies to do that without have to solely buy the new infrastructure.

In February this year, France Telecom and Deutsche Telekom began talks to find areas where the companies could partner in terms of radio access network sharing in Europe, WiFi roaming, equipment harmonisation, M2M services and a set of new growth business development areas.

Both companies signed an initial agreement today, with final negotiations expected to take place in due course.

Shin Umeda, VP routers and carrier Ethernet market research from the Dell'Oro Group explained while this might benefit operators it may limit the number of equipment suppliers needed: "This arrangement may result in a reduced number of equipment suppliers if the operators move from a procurement arrangement to one that expands to include the equipment selection network design process." But for the operators involved Umeda added: "When it comes to procurement, bigger is often better."

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