Deutsche Telekom and France Telecom-Orange have signed an agreement to combine their procurement activities of customer equipment, network equipment, service platforms and IT infrastructure as part of a 50/50 joint venture.
The companies have estimated that after three years, potential global savings could be achieved of between €400 million and €900 million.
The two companies have said they will now be able to bring sustained benefits and savings to their customers, as well as becoming more competitive themselves. Suppliers will benefit, they said, through the harmonization of equipment and features that will enable them to better focus their development activities, thus improving efficiency.
The joint entity will operate from two units, in Bonn and Paris, staffed by members of the existing procurement teams.
Commenting on the deal, Olaf Swantee, executive vice president of Europe and Sourcing at France Telecom-Orange, said: “I am very excited to announce this new project with Deutsche Telekom. 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 new joint venture will offer a more efficient sourcing organisation that will lead to more effective partnerships with suppliers. This will enable us to drive innovation and shape the development of technology in a way that meets customers’ needs.”
Edward R. Kozel, chief technology and innovation officer at Deutsche Telekom, added: “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.
“With France Telecom-Orange we have an experienced and trusted partner who shares the same approach regarding economies of scale as well as customer benefits in technology harmonization.”
The deal remains subject to final agreement and board approvals at Deutsche Telekom and France Telecom-Orange, as well as approval from antitrust authorities.
Headquartered in Paris, France Telecom-Orange employs around 169,000 people worldwide, posting sales of €45.5 billion in 2010. Operating in 32 countries, the company had a customer base of 209.6 million customers at the end of 2010.
Deutsche Telekom operates in over 50 countries and has around 247,000 employees worldwide. With revenues of €62.4 billion in the 2010 financial year, Deutsche Telekom had around 129 million mobile customers, approximately 36 million fixed-network lines and more than 16 million broadband lines as at December 31, 2010.
