Sign in Subscribe
Telecommunications industry

AT&T and IBM Announce Strategic Agreements

Strategic Insights

— 2 min read

AT&T and IBM have announced a series of strategic agreements that involve the acquisition of IBM's Global Network business by AT&T for $5 billion in cash, as well as the signing of outsourcing contracts between the two companies. The acquisition is seen as a key move for AT&T to rapidly increase its revenue, particularly at its fast-growing networking services unit, AT&T Solutions. The agreement also includes the outsourcing of certain applications processing and data center management operations from AT&T to IBM. The transactions could represent an additional $2.5 billion in revenue to AT&T in the first full year of operation.

Key Takeaways:

  • AT&T will acquire IBM's Global Network business for $5 billion in cash, which serves the networking needs of several hundred large global companies, tens of thousands of mid-sized businesses, and over 1 million individual Internet users in 59 countries.
  • The acquisition is expected to accelerate AT&T's ability to deliver IP-based services to global customers and provide a sophisticated new platform for revenue growth.
  • The outsourcing contract awarded to AT&T Solutions by IBM is valued at $5 billion over five years and is expected to double the network outsourcing revenue of AT&T Solutions.
  • The agreement also includes the outsourcing of services between AT&T and IBM's Global Services unit, valued at about $4 billion over the next 10 years.
  • Over 5,000 IBM employees will join AT&T as part of the acquisition, while over 2,000 AT&T management employees will be offered positions with IBM.
  • The acquisition and outsourcing agreements are expected to be completed by mid-1999, following clearance by U.S. regulators and certain regulatory authorities outside the U.S.

Statistics:

  • The acquisition of IBM's Global Network business is valued at $5 billion.
  • The outsourcing contract awarded to AT&T Solutions by IBM is valued at $5 billion over five years.
  • The agreement includes the outsourcing of services between AT&T and IBM's Global Services unit, valued at about $4 billion over the next 10 years.
  • The acquisition and outsourcing agreements are expected to represent an additional $2.5 billion in revenue to AT&T in the first full year of operation.
  • Over 1 million individual Internet users in 59 countries are served by IBM's Global Network business, which AT&T will acquire.
  • The Global Network has over 1,300 dial-up points of presence and dedicated access from over 850 cities in 59 countries.

Sources:

  • "AT&T and IBM Announce Strategic Agreements" (PRNewswire, Dec. 8)
  • AT&T and IBM joint statement

Read more