E-Plus Mobilfunk Selects Alcatel-Lucent as Strategic Partner in Managing Germanys Third-Largest Cellular Network

Mobile provider finds that Alcatel-Lucent delivers the right combination of technical expertise and proven experience in network operations outsourcing.

C A S E S T U DY

MARKET: S E RV I C E P R OV I D E R S

REGION: E U R O P E

With more than 14 million subscribers as of September 2007, E-Plus Mobilfunk GmbH & Co. KG is the third-largest mobile communications provider in Germany. Profitable growth is central to the company, which consistently gears its activities according to its operating results. E-Plus, located in Dsseldorf, has significantly increased its market share since mid-2005, experiencing the fastest and most profitable growth of the providers present on the German market. With the launch of new brands and products such as BASE, simyo, AY YILDIZ and vybemobile in 2005, the company has evolved into a brand group. Since mid-2005, these new initiatives have brought nearly 6 million users to the E-Plus fold.

With our partner, we are able to meet future network construction and maintenance requirements with greater speed, flexibility and cost synergies than we could alone.
ELMAR GRASSER, CHIEF TECHNICAL OFFICER, E-PLUS MOBILFUNK GMBH & CO KG

C H A L L E N G E S Improve competitiveness by reducing operating expenses Apply greater energy to focusing on customers Increase network quality Speed delivery of new services in respond to demand S O L U T I O N Establish strategic partnership with Alcatel-Lucent for outsourcing of operations, maintenance and deployment of cellular network Retain responsibility for strategic network planning and development, including selection of mobile communications locations and equipment B E N E F I T S Reduction of operating expenses helps E-Plus improve competitiveness Greater focus on core business allows E-Plus to deliver innovative services for clearly defined customer segments at sensible prices Improved efficiency and network flexibility contributes to continued profitable growth

The Challenge
Mobile network providers are under constant pressure to keep pace with the competition, and E-Plus Mobilfunk GmbH & Co. KG is no exception. As the third-largest cellular provider in Germany, it faces a challenge familiar to carriers of all kinds: Keep operating expenses under control while ensuring the highest possible quality of service. But for E-Plus, whose core business is its focus on the customer, meeting this challenge was particularly important. In order to keep rolling out the new offerings its customers wantedand to enhance its competitiveness in the processit made the strategic decision to outsource the operations, maintenance and deployment of its cellular network. By doing so, E-Plus hoped to apply even greater energy to service quality and customer attention, while simultaneously improving network quality.

solution that simplifies contact points and provides clear accountability at all stages of the project. It backs this up with 10 Global Network Operating Centers and more than 15 Data Centers providing 24X7 support anywhere in the world. Our decision to enter a strategic partnership with AlcatelLucent was designed to guarantee our subscribers a network of constantly increasing quality over the long term, Grasser says. It put us in a position to focus even more attention on the development of simple, cost-effective mobile communications solutions for clearly defined customer segments.

keep my people even more focused on creating a highquality network while still keeping costs under control.

The Added Value

E-Plus knew that Alcatel-Lucent delivered an unmatched mix of technical expertise and managed service experience. It also learned how well its new partner could meet a different kind of challenge: The smooth transfer of hundreds of personnel. A key part of the outsourcing agreement called for 750 employees to be moved from E-Plus to Alcatel-Lucent, where they would still be responsible for the operation, maintenance and deployment of the cellular network. Given the importance of these employees to the continued success of E-Plus, Alcatel-Lucent made sure to address their concerns about the moveand win their trust as well as the trust of E-Pluss top management. Just as important for E-Plus was the speed with which Alcatel-Lucent could meet the initial targets of the contract. The original terms called for Alcatel-Lucent to move from the RFP stage in September 2006 to the transition stage within six months. But Alcatel-Lucent met this goal in just five monthsassuring E-Plus it could be depended on to handle aggressive timelines going forward. This was a critical concern for the cellular provider, which as part of its combined focus on competitiveness and service was looking to ensure faster rollouts of new offerings in response to customer demand. Consequently, E-Plus recently moved to extend the outsourcing contract with Alcatel-Lucent from three years to five yearsa sign of the trust its placing in its new partner. We were very satisfied with the performance of AlcatelLucent during the first months, Grasser says. Thanks to their well-coordinated team and experience with other international outsourcing projects, the transition phase went smoothly and was managed professionally.

The Solution
E-Plus engaged Alcatel-Lucent as its strategic outsourcing partner at the end of January 2007. Key to the arrangement was its desire to retain responsibility for strategic network planning and development, including the selection of mobile communications locations and equipment. In this way, E-Plus felt it could meet its goal of focusing on customers and service quality. But E-Plus entrusted everything else to Alcatel-Lucent. This included the transfer of the business divisions responsible for the operation, maintenance and deployment of the cellular network. Specifically, Alcatel-Lucent now handles the following: Equipment, including installation, commissioning and documentation Network rollout, including construction planning, site acquisition and communicating with local authorities and contractors Network operations, including supervision, service provisioning and network provisioning Network maintenance, including field staff dispatching and tools management Facility management, including management of facility contractors and local power suppliers Spares management, including repairs, logistics and inventory management I see Alcatel-Lucent as an expert on construction, operation and maintenance, Grasser says. That helps me

Why Alcatel-Lucent?
While E-Plus evaluated several other potential outsourcing partnersincluding the vendors of the equipment underpinning its cellular networkthe provider was ultimately convinced that Alcatel-Lucent was best qualied in helping it meet its business goals, and that it was the best t in terms of price and service offering. For one thing, Alcatel-Lucent has a proven track record of successfully operating, deploying, and maintaining complex carrier networks. In managing more than 60 networks supporting more than 90 million subscribers around the world, Alcatel-Lucent brought the breadth and depth of experience E-Plus was seeking in a strategic partner. For another, Alcatel-Lucent has demonstrated expertise in handling a variety of technologies in end-to-end multivendor environments, which also has helped in fine-tuning the comprehensive set of operational processes that it brings to every project. This was critical for E-Plus, whose network is composed entirely of third-party equipment. Finally, Alcatel-Lucent delivers a single-sourced global

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Next Steps
With the partnership between E-Plus and Alcatel-Lucent now solidly in place, E-Plus is planning to devote even more of its attention to ensuring quality of service for its customers. In fact, with its ability to focus on network design, strategic planning and development, E-Plus has already seen a 16% increase in its subscriber base and a 3% increase in its service revenuesbucking the trend among cellular providers in Germany, which are struggling with decreasing revenue streams. Were the strongest growing in terms of revenue, Grasser notes, with service revenues in the third quarter of 2007 having reached an all-time hight of 735 million Euro (US$1.08 billion) and earnings up by 17% year-over-year. He adds that by retaining control over network development and planningwhile Alcatel-Lucent handles operation and maintenanceE-Plus can concentrate further on keeping costs in check, helping it become even more competitive in Germanys cellular market. An independent evaluation by the German telecom publication Connect bears this out. In announcing test results in its October 2007 issue, Connect notes that E-Plus now matches market leaders Vodafone and T-Mobile on key quality metrics. Due to relatively low operation expenses, [E-Plus] offers attractive tariffs, Connect also points out. This was rendered possible by the outsourcing of its network operations.

Summary
In selecting Alcatel-Lucent as its strategic partner, E-Plus has met the key business imperatives it defined when it decided to outsource the operation, maintenance and deployment of its cellular network. It has achieved the reductions in operating costs it sought; brought the focus back to customer service and network quality; and improved its position in the competitive German cellular market. For us, its always the same two things, Grasser says. Keep increasing quality for our customers, and keep costs under control. Alcatel-Lucent helps us do that.

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