IBM wins £500m deal with mm02

mm02 is outsourcing its customer service and business support functions to IBM in a 10-year deal worth an estimated £500m.

Big Blue will design, build and manage the new systems over a decade with revenues in the first year expected to reach £50m.

One leading analyst said the IT outsourcing contract is indicative of a fundamental change in the mobile sector.

Neil Ward-Dutton, research director of e-infrastructure at Ovum, said: "The rules of the wireless industry game are changing from a vertically integrated industry where operators manage everything from developing handset technology to creating their own retail outlets in a system-support nightmare, to a horizontal model.

"The horizontally integrated model means mm02 focuses on what it really does. It's a brand and it offers services. Its level of customer services is absolutely core to its being able to operate, otherwise its dead."

Ward-Dutton said mm02 is attempting to become almost a virtual operator in that it owns as little as possible but brands as much as possible. "Horizontally integrated models can be very profitable," he said.

He added: "This is a brave move by mm02."

The deal may be rolled out to mm02's interests in Ireland, the Netherlands and Germany Ward-Dutton said.