AT&T Inks $1B-a-Year Deal to Deliver IBM Services

By Sharon Linsenbach  |  Print this article Print


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Updated: IBM employees in 30 nations could be transitioned, AT&T says.

AT&T will provide all of IBM's network management and maintenance, in a deal AT&T is calling a bellwether for other enterprise customers.

AT&T will provide all of IBM's network management services and infrastructure as part of five-year deal estimated at $5 billion, it announced in a filing Oct. 3 with the U.S. Securities and Exchange Commission.

AT&T will provide and maintain IBM's network (LAN) solutions, firewall and security management as well as the MPLS-based VPN, VoiP services, managed voice services, hosting and call center solutions it has been managing since AT&T purchased IBM's network division, Global Networks, in 1998 for $5 billion.

"This could be a bellwether for other large companies who see what IBM is doing with AT&T and to come forward and make AT&T their go-to communications provider," the spokesperson said.

Under the terms of the partnership, AT&T also stated it will incur approximately $60 million in charges in 2007 from technology services purchased from IBM and expects to incur $80 million in charges related to the partnership agreement over the next 12 months, according to Reuters. AT&T did not provide additional details on the charges or the technology services it expects to purchase from IBM.

Read here why this isn't your father's IBM.

Although the deal is expected to generate $1 billion annually in additional revenue for AT&T over the next five years, the partnership is not expected to have a great material impact on AT&T's upcoming financial results, according to the filing.

AT&T told the SEC it intends to transition IBM employees associated with the services in 30 countries.

Editor's Note: This story was updated to include the information that AT&T will provide all of IBM's network management and maintenance.

Sharon Linsenbach Sharon Linsenbach is a staff writer for eWEEK and eWEEK Channel Insider. Prior to joining Ziff Davis, Sharon was Assistant Managing Editor for CRN, a weekly magazine for PC and technology resellers. Before joining CRN, Sharon was an Acquisitions Editor for The Coriolis Group and later, Editorial Director with Paraglyph Press, both in Scottsdale, AZ. She holds a BA in English from Drew University and lives in the Philadelphia suburbs with her significant other and two neurotic cats. When she's not reading or writing about technology, Sharon enjoys yoga, knitting, traveling and live music. Sharon can be reached at Sharon.Linsenbach@ziffdavisenterprise.com.

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