Huawei scores managed services deal with 3UK

Chinese equipment vendor Huawei scored a significant coup on Monday, winning a managed services contract with Hutchison-owned 3UK.

The Chinese firm is taking the job over from Ericsson, which has been managing 3’s UK network since 2005, although it was revealed in 2010 that 3 would not renew the contract at its natural expiration in 2012.

At a time when Chinese network vendors are being shut out of deals in several countries amid security concerns, the UK has extended a hand. In September Huawei executives met with UK Prime Minister David Cameron and Lord Green, minister of state for business, and pledged to invest £1.3bn in the UK, and create 700 more jobs in the country by 2017.

The firm already employs over 800 people in the UK and proposed to invest £650m in ten “global centres of technical and financial excellence”, including group-wide research and development facilities, as well as committing to procure £650m worth of products and services in the country.

Under the agreement with 3, Huawei will deliver service management and operations for the operator’s core network in the UK, the transport network and the ICT applications. Huawei has selected TechMahindra as its ICT Partner to deliver the ICT applications management.

The agreement will see a number of permanent roles transfer to work for Huawei’s managed services business and Tech Mahindra for the ICT applications management.

Dave Dyson, CEO of 3 UK said: ”The decision to select Huawei to manage core network operations follows a rigorous procurement process.  We chose the partner that best met our requirements and which matched our long-term vision of how our network should be managed.”

The original contract won by Ericsson was one of the first major managed service contracts entered into and was believed to be worth in the region of $2.2bn. However, what Huawei has inherited is fundamentally different given the change in scope that occurred during the creation of MBNL, the network joint-venture between Three and Everything Everywhere, the company that runs Orange and T-Mobile brands in the UK.

As the major services provider, Ericsson announced that the project to merge the MBNL networks was completed in November 2010, with more than 12,000 sites consolidated. The five year managed services deal was struck in 2009, giving Ericsson a couple more years before this contract is up for renewal.

Another 2009 managed services contract was signed with Vodafone. This one has a contract length of seven years and saw the transfer of 350 staff from the carrier to Ericsson.

In March, Huawei won a five-year agreement from Telefónica’s UK operation, O2, to manage the operator’s multi vendor core transmission and mobile access network.

Under the deal Huawei will be responsible for planning and managing the core transmission, mobile access and core network build, marking the first major managed services deal for the Chinese firm in the UK.