Amsterdam (13 June 2016) - VimpelCom Ltd. (NASDAQ:VIP), the international communications and technology company that is committed to bringing the digital world to each and every customer, today announces that it has entered into a software partnership with Ericsson (NASDAQ: ERIC), in a deal worth more than USD 1 billion that will radically transform VimpelCom's global IT infrastructure. The partnership encompasses a complete overhaul of VimpelCom's IT infrastructure across 11 countries and 12 time zones - on a scale that is the largest and most ambitious in the industry's history. VimpelCom will digitalize and globalize its Business Support Systems (BSS) infrastructure using Ericsson's new software and cloud technologies.
The agreement reflects VimpelCom's commitment to bringing the best services to its customers through innovative solutions and industry collaborations. The Digital Stack will accelerate product and service development, while the delivery and use of near real-time analytics, will allow greater personalization of services for customers. In addition, a simpler user interface will also enhance the customer experience on all levels.
Jean-Yves Charlier, Chief Executive Officer of VimpelCom, said: This marks a fundamental milestone in our transformation as we move ahead with our strategy to turn VimpelCom into a true digital pioneer. 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 company prepares to unlock new digital services for customers that will be enabled by an advanced network, able to support future-proof features and services. In addition to a significant reduction in operating costs*, the improved technology structure will enable VimpelCom to fast-track its digital innovation strategy, particularly 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.
With access to 10 percent of the world's population, VimpelCom plays a unique role in creating digital empowerment for customers, particularly in emerging markets where they are only now beginning to experience the benefits of 3G and 4G LTE technology.
Hans Vestberg, President and CEO, Ericsson, said: In a fully connected world, success for operators requires performance, flexibility and efficiency. Ericsson's unique BSS as a service concept, combed with our leading services and technology capabilities, will support VimpelCom in realizing these ambitions while positioning the company for further growth as ICT transforms industries everywhere.
The global strategic partnership between VimpelCom and Ericsson represents both companies' commitment to unlocking new digital services for VimpelCom's customers. As a trusted partner, Ericsson will enable VimpelCom's end-to-end digital transformation, which includes the management and operation of the new Digital BSS environment using a cloud-based digital support system architecture, with Ericsson's Revenue Manager at its core.
Yogesh Malik, Group Chief Technology Officer of VimpelCom, said: The future is about being real-time, customizing our offerings, and making them relevant and engaging for our customers as they navigate the digital world. 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. Only by investing in the latest technology and going fully digital will we be able to provide these innovative and competitive services across the Group. Additionally, the pioneering Digital Stack technology will allow us to deliver new digital services that will be enabled by future networks, including 4G LTE and beyond.
*Going forward, VimpelCom Group 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 USD 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. The contract with Ericsson is for a seven-year period with an option to extend.
Disclaimer This release contains forward-looking statements , as the phrase is defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical facts, and include statements relating to, among other things, our digital transformation, our plans to implement the Digital Stack transformation project, and the expected timing, benefits and results of the Digital Stack transformation. The forward-looking statements included in this release are based on management's best assessment of the Company's strategic and financial position and of future market conditions, trends and other potential developments. Forward-looking statements involve risks and uncertainties. The actual outcome may differ materially from these statements as a result of: continued volatility in the economies in our markets; unforeseen developments from competition; governmental regulation of the telecommunica
