Ericsson and 3 Italy finalizes managed services contract

April 19, 2005

Ericsson and 3 Italy have finalized the due diligence and execution of the managed services contract announced on January 20, 2005. The value of the contract is estimated to SEK 15 billion, over five years, making it one of the largest managed services contracts ever signed in the telecom industry.

Revenues will gradually increase over the contract term as the network evolves. Some 750 employees have been transferred from 3 Italy to Ericsson and Ericsson is now managing the operator's multi-vendor network, serving more than 3.5 million subscribers.

Under the agreement Ericsson is responsible for the total management of 3 Italy's multi-vendor 3G-network in Italy. Also included is management of 3 Italy's 3G-multimedia service environment, including the service layer network, as well as management of business support systems such as billing. Ericsson has assumed responsibility for the ongoing optimization of 3 Italy's considerable amount of network assets in Italy, such as sites and transmission.

As part of the contract the parties have agreed to create a service centre that will launch consumer multimedia services for 3 Italy. The Ericsson Service Centre will be used by 3 for the launch of new consumer multimedia services and applications, such as voice, data and video services. The centre will be owned by Ericsson and will launch new services for 3 under a revenue share mechanism. Ericsson will explore and develop new services but also launch new services on the specific input of 3. The agreement regarding the service center will be finalized over the next few weeks.

"With this managed services contract we provide substantial cost savings for 3 Italy and also enable the them to offer supreme network quality to their customers, making the operator even more competitive in the market," said Hans Vestberg, Executive Vice President, Business Unit Global Services, Ericsson.

Ericsson is managing 3 Italy's network according to specified performance goals under a managed services agreement where 3 Italy retains full ownership of all network assets.

The optimization of 3 Italy's network assets, such as sites and transmission, is now managed by Ericsson on behalf of the operator.