Ericsson will return Veon of $350 million for pending obligations under the global IT contract

2019: Ericsson will return Veon of $350 million for pending obligations under the global IT contract

On February 25, 2019 it became known that the Veon group (Beeline works in Russia under a trademark) announced achievement of the arrangement with the Swedish telecommunication producer Ericsson on settlement of a situation with the global IT contract between the parties.

The document signed in 2016 assumed development of Ericsson of support systems of transactions (Business support system, BSS), including billing systems, databases about clients (CRM) and the systems of technical support, for all 11 countries in which at the time of signing of the contract Veon worked. Contract amount was $1 billion.

However in 2017 Veon declared non-performance by Ericsson company of the undertaken obligations. The operator continued to discuss then with the supplier of a term of the contract, having warned about a possibility of its termination or submission of the claim in court.

As reported, the companies managed to agree about what from the total amount of the contract of Ericsson will return Veon of $350 million. In turn, Veon will remove from Ericsson the obligation for solution development of a full stroke for revenue management (Full Stack Revenue Manager Solution). At the same time the parties will continue cooperation in a number of the countries where operators of the Veon group uses IT solutions from this supplier. In these countries Veon upgrades the IT infrastructure using digital support systems of transactions (digital business support systems, DBSS).^[1] Russia is not present at this list of the countries: for February, 2019 Russian "subsidiary" of Veon — VimpelCom — implements the digital project on upgrade of internal IT infrastructure in partnership with Amdocs company.

2017: Veon is going to break off the contract with Ericsson for $1 billion

The telecommunication Veon group (the former Vimpelcom working in Russia under a trademark Beeline) announced in May, 2017 problems with execution by the Swedish producer Ericsson of obligations under the global contract.

In 2016 Veon agreed with Ericsson about development, implementation and support of new software and cloud platform for customer-oriented IT infrastructure^[2].

Contract amount is $1 billion, he was imprisoned for a period of seven years. However Ericsson could not fulfill the obligations for delivery of software, Veon reported, and, most likely, Ericsson will and break further terms and to experience difficulties with contract performance.

Veon is in contact with Ericsson concerning ways of an exit from this situation. The group considers different options, including also a rupture of the contract. If Ericsson is not able to fulfill the obligations, it will bring serious material damage of Veon, warn in group.

The Russian representative office of Ericsson said that the possible delay with delivery of the solution was known several months ago.

"At the moment the company works on elimination of a problem in full to fulfill the obligations to the partner", - reported in the company.

At the companies of the Veon group cooperation with Ericsson is reduced recently. The Russian operator "VimpelCom" who is earlier entering into group selected two outsourcing partners for management of the networks from all Russian regions - Nokia and Huawei.

Cooperation with Ericsson which managed networks of VimpelCom in Siberia and in the Far East earlier was stopped.

2016: Ericsson won the tender of Vimpelcom for delivery of BSS systems

In June, 2016 it became known that the telecommunication giant Vimpelcom selected the Swedish company Ericsson the only system provider of support of business (Business Support System, BSS).

That Ericsson won the global IT tender of Vimpelcom, the Vedomosti newspaper with reference to two partners of operator and the person, close to it, reported.

Ericsson became the only system provider of service of business of Vimpelcom

Under the terms of the agreement, Ericsson will be engaged in installation and service of BSS systems to which customer relationship management systems (CRM) and technical support (helpdesk) and also the billing collecting information on use of services, their tariffings and which is responsible for drawing of accounts to subscribers and payment processing belong.

Financial side of cooperation does not reveal. According to interlocutors of the edition, contract amount only across Russia and the CIS can be about $100 million a year.

Earlier the head of telecommunication division of LetterOne fund (is the largest shareholder of Vimpelcom) Alexey Reznikovich said that IT systems of holding became outdated, they consist of a set of levels and cannot adequately accumulate Big Data for the subsequent work with them.

According to Reznikovich, as a result of updating of IT infrastructure, including by transfer of a considerable part of sales and customer service in the Internet, number of IT specialists in some companies Vimpelcom it will be reduced by 12 times - from 600 to 50.

The partner of Vimpelcom to whom Vedomosti refers, considers a little strange the choice of Ericsson as the system provider of service of business as the Swedish producer always specialized in the equipment, but not in the software. A BSS product of the company too fresh, it is necessary to spend for its installation and adaptation up to three years, the interlocutor of the edition is sure.^[3]

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