Bharti Airtel has contracted out its African IT services to IBM in a ten-year contract that could be worth as much as $1.3 billion (€991 million).
The deal - announced by IBM chief Sam Palmisano and Bharti Airtel managing director Sunil Mittal in Nairobi on Friday – will see IBM consolidate Bharti’s IT systems in 16 countries into a single back-end.
IBM will manage all of the applications, data center operations, servers, storage and desktop services, the companies said.
Kamlesh Bhatia, principal analyst at Gartner, estimated the deal to be worth between $1 billion and $1.3 billion. “It's a good deal for Bharti, as it needs operational stability when it enters Africa...which is extremely fragmented,” he told the WSJ.
Bharti entered the African market through its $9 billion acquisition of Zain’s string of mobile operators early this year.
The contract replicates the arrangement struck in the Indian market in 2004, where Bharti outsourced all of its IT backend to Big Blue. That ground-breaking deal offered IBM a share of Bharti’s revenue as it grew to become India’s biggest mobile operator by customer numbers.
Bhatia said the Indian contract, worth $750 million in 2004, is now valued at more than $2 billion.
IBM said under the arrangement it would provide CRM, billing and self-care plus a “powerful content management system to offer rich media content such as music and video over mobile devices.”
Bharti Airtel said the partnership would enable it to scale its network and systems to more than 100 million African customers by 2012.
The mobile firm has operations in Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia.