Megafon sues Hewlett-Packard for buggy software that was left unattended by subscribers in Moscow

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At the end of October 2018, the Russian telecom operator Megafon sued Hewlett-Packard Enterprise (HPE), claiming to pay damages for failures in the IT system, which led to network outages in 2016 and 2017, reports Reuters. In May 2017, subscribers in Moscow and the Volga region were left without communication for more than seven hours.

The lawsuit was filed in the court of the Northern District of California. The supplier of the equipment and the system integrator are required to compensate for the damage in seven times the amount $ 28 million paid for HPE equipment. This is a UDR (User Data Repository) system- storage with technical information about subscribers and services available to each of them. As a result, it had to be abandoned. Thus, the cost of equipment and the cost of its implementation are direct damage to the customer.

As stated in the lawsuit (available at Reuters), the contract was concluded in 2013, from that moment the implementation of the new system began. But “due to poor performance and failures in the UDR”, accidents occurred in the operator’s network in November 2016, as well as in April, May and June 2017.

“Megafon has not only lost the initial investment in this IT system, but also faced the prospect of unknown additional expenses for its replacement, which are estimated at at least $ 28 million, claims of subscribers, partners from among virtual mobile operators, and, possibly, shareholders” - says the lawsuit.

Thus, the total damage includes:

  • Cost of HPE equipment and its implementation ($ 28 million)
  • Costs of unsuccessful rework of the system to eliminate failures
  • The cost of new equipment that will have to buy for replacement, and the cost of implementation (unknown value, at least $ 28 million)
  • Lost profits due to the loss of clients (on the day of the accident at MegaFon, sales of MTS contracts doubled in Moscow and five times in the Volga region. A representative of Tele2 Russia reported a 2.5-fold increase in sales of sim-cards)

Megafon confirmed the fact of filing a lawsuit and said that it was ready to enter into a settlement agreement at any stage of the process. In March 2018, the operator demanded damage from HPE, but was refused.

HPE won the tender for the installation of UDR, including thanks to the successful experience of installing such systems for other large customers.

In September 2017, MegaFon announced a new tender for the UDR system.

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