IBM has signed a 10-year deal potentially worth $750 million to take over the information-technology infrastructure and applications of Bharti Tele-Ventures Ltd., a major telecommunications conglomerate in India, both companies announced Friday.
The agreement also includes joint development and marketing of IT and telecommunications products and services in India, and names Bharti as a preferred supplier of telecom services to IBM India.
"The agreement demonstrates our strategic intent to create a globally admired telecommunication company," Sunil Bharti Mittal, chairman and managing director of Bharti Enterprises, said in a statement. "With predictable IT spend(ing), improved cash flow and optimized use of technology resources, the agreement with IBM will enhance Bharti Tele-Ventures' shareholder value."
IBM, based in Armonk, N.Y., will manage and develop Bharti's customer-facing IT applications, such as billing, customer-relationship management (CRM) and data warehousing. In addition, IBM will service internal-facing applications, such as intranet, e-mail, and online collaboration. On the infrastructure front, IBM will consolidate data centers, IT help desks, and enhance Bharti's disaster-recovery capabilities.
Payments made to IBM will be linked to the percentage of revenues generated by Bharti Tele-Ventures and pre-defined service-level agreements. Based on estimates agreed between Bharti and IBM, the total deal for the first five years is estimated to range from $250 million to $275 million. Over the whole 10-year period, the contract is likely to be worth from $700 million to $750 million.