Summary
Having beaten Nokia to the purchase of Nortel's wireless assets and won the world's largest network outsourcing deal, how much change does this mean Ericsson must manage?
Analysis
Ericsson’s announcement of its successful $1.13 billion cash bid for Nortel’s CDMA an LTE assets positions the company as a major player in the North American telecoms supply market.
The upside for Ericsson lies not just in the product asset acquisition but in the fact that this deal delivers Ericsson contracts with Sprint, Verizon, U.S. Cellular, Bell Canada and Leap Wireless.
Sprint is particularly interesting because it significantly furthers Ericsson’s ambitions to become a Managed Service Provider to the major global Communications Service Providers. Ericsson recently announced a 7 year network outsourcing contract with Sprint. Prior to this and the Nortel acquisition, Sprint was not really an Ericsson customer. These are major steps because Ericsson has been trying to gain share of the North American managed services markets for some years now.
However, Ericsson still needs to deliver on these major steps and change management has not traditionally been their strong point. The outsourcing deal involves 6,000 Sprint employees transferring to Ericsson. The Nortel acquisition involves transferring another 2,500 Nortel employees supporting the CDMA and LTE access businesses.
Managing these change programs successfully, building on the world’s largest network outsourcing deal valued at over $4.5billion as well as delivering high quality managed services to Sprint and other that will surely follow is no small challenge.Ercisson requires some serious investment in its change management competencies to make sure it can achieve all of this.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
