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Summary

Enterprise analysts are typically bystanders to big telco consolidation news. Telco mergers such as that between BT and EE are seen as being all about consumer quad-play and multimedia content, but it is worth considering the impact for enterprise customers, who are at least as likely to be affected, and who will actually be as important to the new telco partnerships.

EE for enterprise

A 4G-charged BT Retail will be helping serve a UK communications market that was worth £60bn in 2013 according to regulator Ofcom, although nearly £10bn of that was for postal services and radio. BT Global Services, which accounts for some of that UK market, competes in a world market worth more than $650bn. Ovum’s analysis of the 40 major telcos with dedicated enterprise managed services shows that they had revenues of $106bn in 2013, excluding small SMEs, wholesale, and state sector projects. And that is just the managed-telecoms business; it does not include other enterprise service providers such as systems integrators (SIs). The global enterprise ICT services market includes IT outsourcing, cloud services, and consulting integration services that BT can hardly touch, but in which its new German stakeholder, Deutsche Telekom, has significant capability.

As part of the agreement to trade its interest in the EE joint venture, Deutsche Telekom will get a 12% shareholding in BT Group. The chief executive of Deutsche Telekom says that the transaction lays the foundations for the two companies to be able to work together, and one obvious way would be through a combination of or cooperation between BT Global Services and T-Systems. That would create a strong, complementary partnership across those verticals in which they are independently strong, such as automotive and financial services. It would also save both telcos having to look outside for a global SI or IT partner they can trust. It would not be the first telco global enterprise combo either – Orange Business Services and NTT Communications already work together, albeit quietly. With AT&T also engaging in global acquisitions, starting in South and Central America, Verizon and Vodafone would be the last remaining unaffiliated operators in global enterprise services.

Appendix

Further reading

Cloud Services Market Forecast and Vendor Ranking Model, EI022-000006 (April 2014)

IT Consulting and Systems Integration Market Forecast and Vendor Ranking Model, EI022-000005 (April 2014)

IT Outsourcing Services Market Forecast and Vendor Ranking Model, EI022-000007 (April 2014)

“BT/EE: Attention now turns to getting regulatory approval,” TE0007-000880 (February 2015)

Author

David Molony, Principal Analyst, Enterprise

david.molony@ovum.com

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