Overview

Operators are signing large network outsourcing deals with increasing frequency lately. In fact, there are more than one hundred major network operators – both mobile and wireline – that have outsourced at least part of their networks to one of the major telecommunications equipment suppliers, including market leaders Ericsson, Alcatel-Lucent, and Nokia Siemens Networks. Only a couple of years ago, all but a very few operators expressed no interest in outsourcing, claiming that they would never surrender control of their network ‘crown jewels’. Today many of these same companies are signing multi-million dollar, multi-year contracts to turn over responsibility for the network to their equipment supplier partners.



So what explains this shift? Quite simply, significant financial, operational and strategic pressures are forcing operators to reconsider outsourcing. This report provides an overview of the network outsourcing business model, explains its key financial, strategic, and operational benefits. The report also analyzes the profiles of the companies that have decided to outsource as well as their equipment supplier partners. Finally, the report assesses the global market opportunity for network outsourcing and draws out the prospects for future development of the industry.





Network Outsourcing in brief

• Network outsourcing breakdown & business models

• Financial, operational, and strategic impact on operators

• Analysis of 145 contracts to provide insight into who does this, and why

• Market forecasts through 2010, including sources of growth

• Major player strategies & positioning

• Future industry outlook

• Tier-one global operators

• Mobile market leaders

• Wireline market leaders

• Mobile attackers

• Wireline attackers

• Emerging Markets





Operators mentioned in the report:

• 3 Italy

• 3 UK

• 3GIS

• AIS

• Alltel

• BASE

• Bharti

• Brasil Telecom

• BT Global Services

• du

• E-Plus

• Eurotel

• Hutchison Essar

• Hutchison Hong Kong

• KPN

• Maxis

• Midwest Wireless

• Mobistar

• MoviStar Puerto Rico

• Netia

• ONE

• Orange Netherlands

• Rural Cellular

• tele.ring

• Telecom New Zealand

• Telefonica

• Telemar

• Telkomsel

• T-Mobile Netherlands

• Virgin Mobile

• Vodafone Australia

• Vodafone Netherlands

• Western Wireless





Key questions

• What is network outsourcing?

• How does it benefit operators? What are the financial implications of network outsourcing? What are the strategic and operational benefits of outsourcing?

• Which operators have signed outsourcing and managed services deals? Are there certain countries or regions where operators have more fully embraced outsourcing than others? Why?

• How big is the outsourcing opportunity?

• Which companies are pursuing this business? How do they compete amongst each other? How do they differentiate themselves?

• How will network outsourcing shape the telecommunications industry overall? If more operators outsource their networks, how will the future look?





Who should read this report?

Telecom operators

• Assess the impact of network outsourcing on their own businesses

• Gain insights into how operator choices will impact the nature of competition and the development of the industry



Equipment suppliers

• Find out how operators perceive benefits and risks of network outsourcing

• Analyze competitor positioning in market



Telecom regulators and administrations

• Gain insights into a trend that is transforming the industry

• Analyze future actions required of regulators



Investors and analysts

• Find out how network outsourcing will change operators’ cost structures

• Gain insights into the transformation of equipment manufacturers into service providers

1 - Executive summary

2 - Defining the network outsourcing opportunity
• What is network outsourcing?
• Major network outsourcing deals between operators and equipment suppliers
• Why are operators doing this?

3 - Analyzing the operators that are signing network outsourcing contracts
• Tier-one global operators vs. mobile market leaders vs. wireline market leaders vs. mobile attackers vs. wireline attackers: For which groups and in which regions is this most popular? Why?

4 - The benefits of outsourcing
• What are the financial, operational, and strategic benefits of network outsourcing?
• The financial benefits – a detailed analysis

5 - Sizing the market
• What will drive growth over the next five years?
• Developed markets vs. emerging markets: The future outlook

6 - Strategies of the big three equipment suppliers
Ericsson, Alcatel-Lucent, Nokia Siemens Networks
• Understanding Ericsson’s current market leadership
• Analyzing the future competitive landscape in a convergence world

7 - Future outlook
• If more and more operators outsource their networks, how will this impact the industry?

Selected figures
• Selected managed services business models
• The network functions of a typical operator
• 3 examples of select network outsourcing arrangements
• Penetration rate of fixed-line and mobile subscribers, by region, 2002-2010
• Mobile ARPU, by region, 2003-2006
• Managed services drivers and number of announced managed services deals, by region
• Major managed services contracts, by operator type
• Number of managed services contracts, by operator type
• Developed markets fixed telephony revenues, 2002-2010
• The outsourcing cost model
• Example of network performance enhancements from outsourcing
• ‘Average’ allocation of OPEX for a mobile operator
• The potential savings from outsourcing
• Market size, 2005-2010
• Number of announced managed services contracts, by equipment supplier and by operator type
• Number of managed services contracts, by equipment supplier and by country
• Equipment suppliers’ infrastructure market share
• Comparison of top three managed services providers
• Size comparison of leading infrastructure suppliers’ services revenues, 2006
• Potential future industry structure