European telecoms heavyweights Deutsche Telekom (DT) and France Telecom (FT) are setting up a joint venture for equipment purchases in a move they say could save them up to EUR1.3 billion (USD1.9 billion) per annum. In a non-binding ‘Term Sheet’ agreement signed today, which will be the basis for final contracts yet to be negotiated, the former monopoly operators will combine their procurement activities of ‘customer equipment, network equipment, service platforms and – starting with four pilot-projects – IT-Infrastructure’ from the fourth quarter of this year. The French partner envisages annualised savings under the tie-up of around EUR900 million, while its German counterpart is looking at savings of more than EUR400 million, they said.
In a joint statement the pair went on to say: ‘With this procurement cooperation Deutsche Telekom and France Telecom-Orange will be entering a new era of smart industry cooperation. Both groups will be able to bring sustained benefits and savings to their respective customers as well as ensuring that their businesses will be more competitive. Suppliers will benefit through the harmonisation of equipment and features that will enable them to streamline their development activities and further generate synergies and efficiencies’. Under the plan, FT and DT will set up two operational units, in Paris and Bonn respectively, and will provide ‘measurable value in terms of experience and economies of scale for the benefit of both groups and their respective customers’.