LIME outsources operations to Ericsson
Published:Wednesday | March 27, 2013 | 12:00 AM
LIME Jamaica has struck a seven-year deal with Ericsson, under which it will outsource its external installation and maintenance services to the global firm.
The terms were not disclosed.
Under the agreement, which takes effect on May 20, 2013, Ericsson will manage, install and repair LIME's fixed, mobile, Internet and data networks.
Ericsson will, for instance, install devices in homes, and monitor activity while repairing damage to cell towers.
"When we consider Ericsson's vast knowledge of network design, optimisation and field maintenance, along with the economies of scale that will be achieved, we are confident that we will be well positioned to provide best-in-class service on par with operators across the globe," said LIME's managing director for Jamaica & Cayman, Garfield Sinclair, in a statement announcing the arrangement.
Job cuts
The move will lead to an undisclosed number of job cuts as these tasks are currently done by internal staff or contractors. However, workers will have an opportunity to reapply at Ericsson, LIME said.
"Successful applicants will become part of Ericsson's global network of professionals and will benefit from the firm's advanced expertise and training, with opportunities for further career advancement," stated the release. "In addition to their separation package, LIME has also put in place a number of employee support services, including career-change counselling and financial advice."
LIME Jamaica has struggled for years to shed its losses, which have accumulated over time to J$36 billion. The outsourcing agreement is among the strategies being pursued by the telecom to seek what Sinclair described as the primary objective - profitability.
Last year, LIME reported losses of J$20 billion - its largest annual deficit ever - but said it resulted from a non-cash charge of J$15.75 billion on the write-down of impaired assets.
The company has maintained a surplus on operations throughout the downturn - even though that, too, has fallen from J$4.5 billion in 2009 to J$2.2 billion at year ending March 2012.
Alongside its impairment charges, LIME faces an annual J$1.8-billion debt-servicing charge on borrowings of J$26 billion owed to its London-based parent.
The company has been aggressive in its push to have Government revolutionise the rate structures for telecoms (see related story on Page C3), which Sinclair has said is fundamental to the company's successful turnaround.
Its year-to-date performance as at December 2012 points to a reduction in net losses relative to the previous year - J$2.2 billion versus J$3.8 billion.
Ericsson is a leader in the 'managed services business' with contracts that serve a combined 950 million subscribers globally. The 'managed services agreement' expands the business dealings between the two entities. LIME spends J$10 billion annually on its operations, of which more than J$4 billion funds staff cost.