Huawei wins managed services contract for O2 network

Huawei has made a significant step in growing its UK business by winning a five-year contract from mobile giant Telefónica, the firm announced today.

The deal will see the Chinese telecoms company plan and manage Telefónica’s core mobile network in the UK, which provides connectivity to O2 customers.

The money involved has been kept under wraps by both parties, but they have confirmed 56 permanent employees will transfer from Telefónica UK to Huawei to run the network, and a further 62 contractor roles will be moved to its headquarters in Basingstoke, Hampshire, as part of the deal.

It is the first major managed service contract Huawei has won in the UK, but not the first time it has worked alongside Telefónica.

“Huawei works with Telefónica in a number of markets around the world, and today’s agreement means we are extending our relationship to the UK,” said Victor Zhang, CEO of Huawei UK.

“The agreement is a long-term strategic commitment from both Huawei and Telefónica UK to deliver best-in-class management of a core network,” he said.

Huawei may not be a household name yet, but it has had a base in the UK for 10 years, now employing 800 people.

As well as this managed services division, the company has both an enterprise and consumer business, with all three working together on specific large customer contracts, rather than as separate entities.

Huawei looks after its dealings with Telefónica through an account team based in Spain, and aims to offer end-to-end solutions, from networking services to mobile hardware, due to its huge investment in R&D.

A spokesman from the company told Computer Weekly the firm invests 10% of its revenues into R&D, which equated to $3.8bn last year, and employs 68,000 people in its global research centres, allowing it to come up with new innovations based on what its major customers request.

This may explain the latest deal and why last week O2 confirmed it would be stocking two Huawei handsets – the entry-level Ascend Y 100 smartphone and the G7105 feature phone – exclusively in the UK.

However, the deal with Telefónica in the UK will not involve any Huawei kit, making the play purely about its managed services, rather than its hardware.