Deutsche Post World Net (DPWN) has signed a contract with Telefonica worth nearly €350m which will see the telecoms firm managing the full breadth of DPWN's communications services across 28 European countries over the next five years.

The deal aims to completely transform the IP network services of DPWN as well as its integrated Deutsche Post, DHL and Postbank companies, saving the company's logistics group more than €150m in costs over the duration of the contract.

This is Telefónica's biggest pan-European combined fixed and mobile contract, which will take over all the telecommunications services for 2,400 sites in Europe, 125,000 employees and more than 100,000 LAN Ports, more than 60,000 fixed voice devices and 80,000 mobile connections including 24,000 mobile and smartphone devices.

"DPWN has grown through acquisitions and in some countries we operate multiple networks with multiple standards," said John Allan, chief financial officer and head of Global Business Services for DPWN.

To deal with the load, Telefónica will reinforce and extend its global IP backbone in Europe to provide services in 28 countries, including wide area network connectivity, centralised internet access, wireless LAN, fixed voice, mobile voice and data. It will also include a range of related IT services such as managed security, web conferencing, unified messaging and fixed mobile convergence.

All of this will be managed by a dedicated round-the-clock Service Management Centre in Prague and is expected to go live in early summer of 2009, subject to the usual approval by authorities and completion of the transaction.

The deal was spearheaded by O2 in the UK. The service will be delivered by Telefónica in Spain, its O2 businesses in UK, Ireland, Czech Republic and Slovakia as well as new operations and partnerships in 23 other Western European countries.

There are no job cuts planned at DPWN as part of the telecommunications streamlining, but as part of the process Telefónica will be reviewing the existing telecom service agreements of the 84 partners currently used by DPWN.

Due to an existing relationship with Deutsche Telecom the deal excludes Germany despite the fact that DPWN is headquartered there.