O2 prepares assault on Vodafone’s share of £600m public sector

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Operator looking to secure a third of all public sector mobile revenues within the next three years

O2 says it will double its revenues from mobile connections in the public sector as it looks to end Vodafone’s dominance in the space.

According to O2 business director Ben Dowd (pictured), mobile contracts in the public sector represent around 1.3 million connections – valued at around £600 million per year.

Dowd says Vodafone “dominates” the public sector at present, estimating it to manage around one million mobile connections. This accounts for around 75 per cent of the £600 million total revenue figure.

O2 has a share of around 15 per cent of public sector mobile revenues, but expects this to more than double by 2015.

‘Ripped off’
Dowd claims there is a feeling in government that the public sector has been “ripped off” by Vodafone in recent years and is now looking at alternative suppliers. He says this stems from a 2010 public sector efficiency review, carried out by Sir Philip Green, which stated the public sector was not receiving value for money from its telecoms and IT providers.

The report stated 98 per cent of the £21 million annual spend on mobile went to a single provider (Vodafone), with 68 different contracts in place.

Dowd says O2 has been lobbying the government ever since and a number of “major” contracts are now coming up for renewal. He revealed in November that O2 had signed two Vodafone customers worth 30,000 connections combined – but confidential agreements prevented these being named.

Dowd said: “We see huge opportunities in the public sector. Vodafone has been dominant in that space for too long and by 2015, we will be disappointed if we don’t have at least a third of that market.

“We have spoken to many of the customers we don’t have and they are ready for change. Many feel they have been ripped off in the past.

“We are aware some big contracts are coming up for renewal and we will look to bring them on board. We are still the new kids on the block in the public sector. We are not the establishment and we have everything to gain and nothing to lose.”

Government cuts
Dowd says O2 can play a key role in “transforming” the way in which the public sector operates  through use of its other products and services such as fixed line (Joined Up) and IT (O2 Unify).

He said O2 is helping government departments save money by consolidating their telecom and IT needs, but also by educating them on ways to reduce costs further, for example  through remote working to reduce spend on property.

Dowd also revealed O2 is looking to develop applications designed to help UK councils reduce costs and better serve the public. The operator is currently working with Reading Borough Council on an app designed to help local citizens not in employment, education or training (NEET) to find work. The app, which goes live in April, will also provide tips on applying for an interview.

O2 is also working with Luton Borough Council to help reduce administrative costs and queuing times in its town hall.

Dowd said: “Improving efficiency, reducing costs and helping the community are things that keep many in local government awake at night.

“We aren’t going to the government with just a minute and rate proposition but a rate card of different services. We offer something new and the reaction has been very receptive.”

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