Ericsson signs key managed-services deal in U.K.

By Reuters

Published: December 6, 2005, 5:02 AM PST

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Mobile-phone equipment giant Ericsson said on Tuesday that it has signed its biggest ever managed-services deal with British operator Hutchinson 3G UK, a division of Hutchison Whampoa also known as 3.

Ericsson did not release a value for the deal, but a company representative said it is worth more than a similar contract to run 3's network in Italy, which it won in January.

The representative said the value of that deal "had been indicated" at 15 billion to 20 billion crowns ($1.87 billion to $2.49 billion). Ericsson shares were suspended before the news and rose 4.1 percent to 27.9 crowns ($3.50) after trading resumed.

Managed services, where Ericsson runs the network on behalf of operators, is seen by the Swedish company as a key growth area, alongside its traditional business of selling radio and transmission equipment to operators.

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"This is the largest managed-services partnership contract signed by Ericsson to date and one of the largest ever signed in the industry," Ericsson said in a statement.

Ericsson said it would take charge of the management, maintenance and expansion of 3's network and IT infrastructure, as well as ongoing radio network rollout.

It would also ensure the maintenance of the existing 6,300 radio sites and the management of the core network and operations center.

"Over 1,000 3 employees from the network and IT functions will be transferred to Ericsson," the company said.