Mobile Operator Network Outsourcing Leads to 20-25% Reduction in Cash Costs Says Pyramid Research

Business Wire, July 6, 2006

CAMBRIDGE, Mass. -- As mobile operators watch their bottom line, outsourcing has become a more acceptable approach to increasing profitability, as it offloads the cost burden to the partner firm. Operator savings vary, depending on the scope of the outsourcing relationship, but Pyramid Research estimates that outsourcing can reduce the cash costs of a typical mobile operator by 20-25 percent in its new report "The New Frontier for Vendors: An Analysis of Network Services and Outsourcing."

"Operator savings stem from reduced CAPEX through network sharing and effective asset management, as well as from OSS and network management outsourcing," comments report author Elizabeth Bramson-Boudreau.

The report compiles and analyzes numerous in-depth interviews with mobile operator executives worldwide. One executive noted, "The (outsourcing) deal got us a clear 20 percent saving on manpower costs. With additional immediate OPEX savings, our first year savings were in the region of 35 percent."

Pyramid Research expects mobile operators to increasingly take advantage of outsourcing. Pyramid is forecasting the total outsourcing opportunity for vendors - US$51.5bn in 2005 - to increase to US$55.3bn by 2010 for a 1% CAGR. However, when the two big slump areas--Network Build and Deploy and Network Design--are taken out, it is clear that the outsourcing opportunity is growing healthily, at an 8% CAGR.

About Pyramid Research's Vendor Services Program

Pyramid Research's unique expertise in the area of network OPEX is derived from ongoing interviews and direct contact with key industry players. Its market-leading Vendor Services Program offers critical insight into the priorities fueling operator decision making, and helps vendors position themselves to attract network outsourcing and application hosting and development contracts from operators worldwide. The program segments market demand for outsourced and hosted services at the regional level, projecting the most lucrative opportunities, and provides vendors with direct feedback from their operator customers.

About Pyramid Research

For twenty years, Pyramid Research has helped companies in the converging communications, media and technology industries stay ahead of market trends, understand competitive threats and capitalize on opportunities. We advise the world's leading telecoms equipment vendors, service providers, and the financial community on how to implement best practices, build offensive growth strategies, and drive profitability.