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O2 signs managed services deal with Huawei amid poor European results

The UK branch of the Telefonica group is using the China-based vendor to manage its core mobile network

Telefonica UK, better known as O2, has signed a five-year managed services deal with China-based services provider Huawei.

The contract signing comes as the telecommunications provider reported a 53.9 percent drop in net profit to £599 million for the first quarter of 2012, compared with the first quarter of 2011.

The group largely pointed to a difficult performance in Europe as the cause of its poor performance, where it said it faced "economic headwinds, with negative impacts from regulation and stiff competition". Operating income in Europe was down 23.6 percent year on year to £1.3 billion.

O2 has since announced that it will be transferring 118 staff to work for Huawei's managed services business, where under the agreement, Huawei will be charged with planning, implementing and managing Telefonica's core transmission, mobile access and network in the UK.

"We are very pleased to announce our first major managed services agreement in the UK," said Victor Zhang, CEO at Huawei UK.

"The skills and experience transferring to work with us will be invaluable as we seek to develop our managed services capabilities in the UK as well as managing Telefonica UK's core network."

Huawei is also vying for additional revenue in the US, where it traditionally has had difficulty striking deals with large enterprise customers due to security concerns about it being based in China, by signing a distribution agreement with Synnex.

Synnex's ConvergeSolv Secure Networking division will work with resellers to deliver Huawei's portfolio of IP network infrastructure, unified communications and data centre products across the US.

Synnex customers will be able to test Huawei's products in its proof-of-concept demo labs in its US distribution headquarters located in Greenville and Fremont.


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