France Telecom, Deutsche Telekom establish telecom equipment purchasing partnership

Deutsche Telekom (XETRA: DTE.DE) and France Telecom (NYSE: FTE) have formed a joint equipment purchasing and procurement venture that they claim will save both providers about $1.9 billion a year.

Structured as a 50/50 joint venture, the two once state-run former monopoly phone companies will combine their procurement of customer premises equipment (CPE), network equipment, service platforms and--starting with four pilot-projects--IT-Infrastructure in a 50/50 joint venture beginning in Q4 this year.

Set up with two operational units in Bonn and Paris, the two service providers said they will achieve "significant synergy benefits through best practice sharing, leveraging global scale and harmonized technology processes" while vendors "will benefit through the harmonization of equipment and features that will enable them to streamline their development activities and further generate synergies and efficiencies."

Through the joint venture, Deutsche Telekom believes they can save up to €400 million ($570.4 million) a year, while France Telecom claims it could save about €900 million ($1.3 million).

Neither company is a stranger to one another. Not only do they operate the joint Everything Everywhere mobile venture in the UK, but they also established an agreement in February to identify potential areas of cooperation in radio access network sharing in Europe, WiFi roaming, equipment harmonization, and Machine-to-Machine (M2M) services.

While it appears that a big focus of the venture is around wireless, it's not hard to imagine that the joint venture could have a great impact on the wireline. Both service providers have continued to ramp up their deployments of Fiber to the X in addition to business-based Ethernet services in their respective homelands and internationally.

For more:
- see the release
- Bloomberg has this article

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