O2, the UK subsidiary of
), has been selected as the preferred bidder for the smart metre
implementation program by The Department of Energy and Climate
Change (DECC) of UK.
The Spanish telecom giant has been selected by DECC to provide
communication services in the midlands, East Anglia, Wales and
Southern England. The 15-year contract is worth $1.5 billion.
However, the company is currently negotiating with DECC over the
next step and will provide further information on the contract in
due course of time.
The smart metres will let households in UK to control their
electricity and gas usage, thus enabling the customers to reduce
energy bills. Additionally, the new smart metres tariffs will
provide customers with cheaper electricity at times of low
demands. The nationwide project is expected to install 53 million
smart metres by 2020, which will provide real time information to
the consumers about the amount they are spending on energy at a
Telefonica will act as a communication service provider to
send the metre reading to the energy suppliers and data
communication firms via its cellular network in the UK. Its
network will be supported by the use of mesh technology to
connect smart metres in areas with lack of network coverage.
The other companies who were pursuing for the contract include
the consortium of
Vodafone Group Plc.
Silver Spring Networks Inc.
). Telefonica also competed with another group consisting of
Arqiva, BAE Systems Detica and
BT Group Plc.
), who have won the smart meter contract in the northern region
We believe that the contract will be a long-term revenue
contributor to O2 in the UK, where the company struggles over low
mobile tariffs and stiff competition. Furthermore, wining the
contract ahead of rival Vodafone is a significant milestone for
Telefonica in the UK.
Telefonica currently carries a Zacks Rank #3 (Hold).
BT GRP PLC-ADR (BT): Free Stock Analysis
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