AT&T Acquires IBM's Global Communications Network for $5 Billion

Strategic Insights -

AT&T Corp. has agreed to purchase IBM Corp.'s global communications network for $5 billion in cash, marking a significant move to enhance its international reach and position in the modern phone industry. The deal, which marks a major gap in AT&T's operation, will extend its global presence and enable it to supply high-speed data services and Internet access to businesses worldwide. The acquisition is expected to strengthen AT&T's hand compared to other international players, such as Global One, and position it as a leading global provider.

Key Takeaways:

  • The deal involves AT&T purchasing IBM's global communications network for $5 billion in cash, expanding its international reach and enhancing its position in the modern phone industry.
  • The global network provides data services to several hundred global companies, tens of thousands of midsize businesses, and over 1 million individual Internet users in 59 countries, generating $2.5 billion in revenue.
  • As part of the deal, 5,000 IBM employees from the global network division will join AT&T, bolstering its presence among global companies based in the United States.
  • The acquisition strengthens AT&T's joint venture with British Telecom by providing an Internet-based network in 93 out of the 100 cities they are focusing on.
  • AT&T faces formidable hurdles in integrating its network with IBM's, updating equipment, and melding its operations with British Telecom's, similar to the issues Global One has experienced since its formation in 1996.
  • IBM will manage AT&T's computers that support its long-distance services for business customers for $4 billion over 10 years, offering over 2,000 AT&T employees jobs at IBM.
  • AT&T will run the network that enables IBM's big business customers to talk and transmit data within their own companies and with others for $5 billion over five years.

Statistics:

  • ATT will acquire IBM's global communications network for $5 billion in cash
  • The global network generates $2.5 billion in revenue and provides services to several hundred global companies, tens of thousands of midsize businesses, and over 1 million individual Internet users in 59 countries.
  • 5,000 IBM employees from the global network division will join AT&T
  • The acquisition strengthens AT&T's joint venture with British Telecom by providing an Internet-based network in 93 out of the 100 cities they are focusing on.
  • IBM will manage AT&T's computers that support its long-distance services for business customers for $4 billion over 10 years
  • AT&T will receive $5 billion over five years for running the network that enables IBM's big business customers to talk and transmit data within their own companies and with others

Sources:

  • The Kansas City Star, "AT&T to Buy IBM's Global Network for $5 Billion", 1998
  • Knight Ridder/Tribune Information Services, Distributed by