VimpelCom to invest $1 bn for digital transformation

Ericsson has bagged a software deal worth more than $1 billion from telecom network operator VimpelCom.

The IT investment is expected to transform VimpelCom’s global IT infrastructure across 11 countries. VimpelCom will be making investment to digitalize and globalize its Business Support Systems (BSS) infrastructure using Ericsson’s new software and cloud technologies.

Ericsson competes with Nokia, ZTE and Huawei in the global telecom infrastructure market.

VimpelCom in a statement said that its investment in digital capabilities will accelerate mobile product and service development, while the delivery and use of near real-time analytics, will allow personalization of services for customers. In addition, a simpler user interface will enhance the customer experience.

VimpelCom CEO Jean-Yves Charlier said: “The new Digital Stack will help us better respond to our customers while also centralizing and simplifying our business, creating lean and agile operations that will result in a more efficient cost structure across our global footprint.”

As a result of the digital transformation, VimpelCom’s IT systems management will become smarter, simpler and more future-ready as the telecom company prepares to unlock new digital services for customers that will be enabled by an advanced network.

VimpelCom is investing in the areas of mobile entertainment, communication, the Internet of Things (IoT), and mobile financial services (MFS). Along with a wider digital service offering, VimpelCom will have the ability to offer customers customized offers, a frictionless online service experience, and the speed and convenience of simplified and fully digital customer care.

Yogesh Malik, group chief technology officer of VimpelCom, said: “This technology shift is a huge leap forward for VimpelCom and forms part of our strategy to transform into an agile business that understands our customers and answers their digital needs. By investing in the latest technology and going fully digital, we will be able to provide innovative and competitive services.”

VimpelCom will reduce by more than 50 percent its IT expenses (Opex and Capex) by year three, down to a ratio of around 2 percent of Group total revenue.

These efficiency gains are already included in the target of $750 million cash flow improvement disclosed to the market in August 2015. The costs and investment associated with the project are included in VimpelCom’s financial guidance for 2016, as disclosed in the first-quarter results on 12 May 2016.