Ericsson shares surge after major 3 deal

The Swedish telecommunications giant Ericsson said on Tuesday that it had signed a major contract to run the entire network of British mobile phone operator 3, a subsidiary of Hong Kong's Hutchison Whampoa.

Ericsson said the deal was its largest managed-services contract ever and one of the largest such deals in the telecommunications industry.

The company gave no figures for the value of the contract, but its largest single contract previously was a five-year managed-services deal with 3 in Italy for 15 billion kronor (1.9 billion dollars).

“We are talking about something around 20 billion kronor,” estimated Helena Nordman-Knutson, telecommunications analyst at Öhman Equities.

“Three billion per year, maybe more,” she told the TT news agency.

The agreement announced on Tuesday, which gives Ericsson responsibility for the management of the 3 network and its IT infrastructure, runs over seven years, it said.

Ericsson said it would also be in charge of 3’s ongoing radio network rollout, the maintenance of 6,300 existing radio sites and the management of the operator’s core network and operations centre.

3 was to retain ownership of the network and its IT assets as well as responsibility of the strategic direction of the network.

Some 1,000 staff would be moved from 3 to Ericsson as part of the accord.

Ericsson shares rose 3.73 percent to 27.80 kronor on the Stockholm stock exchange following the announcement, having been suspended just ahead of the statement.

3, the first company to have launched third-generation mobile services in Britain, has 3.2 million customers in Britain and 10 million worldwide, Ericsson said.

Ericsson, which claims to have the industry’s most comprehensive managed services offerings, currently has such agreements with 55 operators worldwide, representing 50 million customers.