WorldWide Tech & Science. Francisco De Jesús.
Deutsche Telekom and France Telecom are to form a procurement joint venture that aims to eventually cut the cost of buying handsets and network equipment by EUR1.3 billion a year. The two European giants announced today that they have signed a non-binding agreement to create a 50/50 partnership to “combine their procurement activities of customer equipment, network equipment, service platforms and IT-Infrastructure.”
The alliance is further evidence of close cooperation between the two formerly fierce rivals, following the merger of their UK mobile networks last year. Deutsche Telekom owns the T-Mobile mobile brand, while France Telecom is the company behind Orange. The two firms said that the run-rate after three years of implementation in potential global savings is estimated at “above EUR400 million” for Deutsche Telekom and “below EUR900 million” for France Telecom. Savings from alignment in network equipment in the first three years of the JV will be balanced out.
The “jointly-owned and operated entity” will have operational units in Bonn (Germany) and Paris (France). The two units will be staffed by employees from the respective procurement departments of both companies that already deal with purchasing customer equipment, network technology, service platforms, IT-Infrastructure and procurement engineering.
The final agreement is expected to be signed in the coming weeks, but remains subject to the necessary board approvals and antitrust clearance. The agreement builds on an earlier announcement that the two firms will explore potential areas of cooperation in “radio access network sharing in Europe, Wi-Fi roaming, equipment harmonisation, Machine-to-Machine (M2M) services and a set of new growth business development areas.”