O2 UK with Telefónica sign €350m pan-European telecoms services agreement

Deutsche Post World Net, the global express and logistics provider known for the DHL brand, has selected Telefónica to manage its communications services across 28 European countries over the next five years.

This is both Telefónica and O2 UK’s largest and most complex telecoms contract at enterprise level so far. The deal, which was led across the Telefonica group by O2 UK, is worth Euro 350 million. Telefonica will become Deutsche Post World Net’s primary fixed and mobile telecommunications provider in Europe and is expected to help the logistics group save over Euro 150 million in costs over the period.

Ben Dowd, business sales director at Telefónica O2 UK, commented: “This definitely demonstrates Telefonica’s international capability. Telefonica is clearly a very large corporation in its own right, but this particular deal was led by O2 UK, which collaborated across the group on this deal.”

Telefónica will take over from the 84 current providers of telecommunications to Deutsche Post World Net by providing secure telecommunications services for 125,000 employees at 2,400 sites in Europe. Telefonica will transform Deutsche Post World Net IP network services by building an MPLS IP network across the client’s 28 countries, with the transition from the 84 suppliers set to go live this summer, subject to the usual approval by the cartel authorities and the completion of the transaction.

The service will be delivered by Telefónica in Spain, its O2 businesses in UK, Ireland, Czech Republic and Slovakia as well as new operations and partnerships in 23 other Western European countries. The European service will be managed by a dedicated 24×7 Service Management Centre in Prague.

Dowd added: “Some of the services being provided are ones that O2 UK, prior to its Telefonica relationship, wouldn’t have been thought capable of doing for customers. As it is, we continue to take business from our competitors.”

Telefónica will reinforce and extend its global IP backbone in Europe to provide services in 28 countries, including wide area network connectivity, centralised internet access, LAN services such as wireless LAN, fixed voice, mobile voice and data as well as IT services such as managed security, web conferencing, unified messaging and fixed mobile convergence. The contract comprises more than 100,000 LAN ports, more than 60,000 fixed voice devices and 80,000 mobile connections including 24,000 mobile and smartphone devices.

The agreement includes a commitment to continuous innovation in addition to strict service level agreements in order to assure further optimisation and cost savings over the lifetime of the contract. There are no job cuts planned at Deutsche Post World Net as part of the telecommunications streamlining.

Deutsche Post World Net has been seeking to reduce costs and derive more value from its businesses as part of its Roadmap to Value capital markets programme. The Group is also seeking to optimise its telecommunications services in the US, Latin America, Asia Pacific, as well as emerging markets, which is expected to lead to additional cost savings in 2009. As already announced, the Group aims to cut one billion euros in costs by the end of 2010.

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