By Jo Best, 10 March 2005 11:00
NEWS BT has announced it has secured its biggest ever outsourcing contract, with news organisation Reuters.
The $3bn, eight-and-a-half-year deal will see BT providing Reuters with secure network services.
BT CEO Ben Verwaayen described the agreement as a "blockbuster deal" for the telco.
The announcement of the deal provides the conclusion to months of discussions between the pair, which first announced their intended partnership back in October 2004.
A BT spokesman described the deal as "extremely significant" and described it as the "latest in a series of momentum-building wins" for the company, which recently secured several key networking deals including a £500m contract with Barclays and a contract with US pharmaceuticals firm Bristol Myers-Squib, estimated at around $500m.
Mike Cansfield, research director at analyst house Ovum, said the deal will help to open the door for the telco into the financial services market.
"It's a landmark deal," he said. "It's a gateway into the financial services market that was hitherto closed to operators - not just BT but others. 'We'll build it ourselves, these phone companies don't understand us' has been their attitude."
Cansfield added that "Reuters is the type of global account BT would aspire to have... BT is having great success in ICT services [at the moment] - it's showing here it's not just UK, it's not just Europe, it's global."
RedMonk analyst James Governor, however, believes that the telco could be setting itself up for a fall.
"The deal is all about managing the risk - for both companies. We're going to find out a lot about BT's capabilities from this." He added that if BT couldn't manage the contract without incurring penalties - as in its recent dealings with the NHS, the stock market may lose confidence in the company.
As previously reported, BT also confirmed the finalisation of its deal to buy Reuters extranet company Radianz for $175m.
Radianz will continue to supply Reuters with extranet services and target the financial services sector. The sale price of the company will be counted against the overall contract value, with Reuters now free of a $44m funding obligation towards Radianz and seeing the news company exit the data networks business.
The Radianz buy is the latest in a line of high-profile acquisitions for the telco - recently snapping up voice and data firm Infonet and completing the acquisition of fellow telco Albacom earlier this year.
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1. anonymous
Radianz was a joint partnership between Equant and Reuters until recently when Reuters bought out Equant
Sounds like spin entered the press release!