Bharti's $750 mn IBM IT deal touches $2.5 bn mark

India's largest private telecom company, Bharti Airtel's 10-year $750 million outsourcing deal with IBM has touched the $2.5 billion mark as of March-end 2009, a top executive familiar with the deal told. This week, Bharti and IBM are set to kick off celebrations in Delhi to mark the half-way tenure (five-year mark) of this first-of-its kind IT outsourcing deal. Riding on the success of this deal with Bharti, IBM had also signed similar outsourcing deals with Vodafone and Idea Cellular last year, worth $1.2 billion and $900 million, respectively. In February this year, IBM also announced an IT outsourcing deal with Malaysia’s leading operator Maxis. Executive familiar with this partnership said that the Maxis deal was too, similar to the ones IBM has with the Indian operators. "The Maxis deal is estimated to be worth around $300 million and was largely handled by the IBM's Indian team that had handled similar projects here," explained an executive who tracked the development. Additionally, leveraging its partnership with Bharti, the US-based software major is in talks to extend this IT outsourcing model with Africa's largest telco MTN in a deal that is estimated to be worth about $2 billion, this executive added. In 2004, Bharti and IBM had expected that the IT outsourcing deal would yield revenues to the tune of $750 over the 10-year period. But, projections proved to be widely underestimated as Bharti experienced record growth over the last couple of years. The growth is best understood if we consider the figures. Bharti had about 6 million mobile customers when the deal with IBM was signed in 2004, but the telco’s subscriber base has reached over 94 million at present. Bharti is also adding close to 3 million new customers per month, equivalent to 50% of its subscriber base in 2004. IBM has bagged and executed several telecom projects globally over the last two decades, but until recently, it was involved only in three end-to-end IT infrastructure transformation projects, all of which were in India. The Maxis-deal, the latest addition to the IT’s major’s kitty is a clone of its deals here. Bharti, which recently launched mobile services in Sri Lanka, has outsourced all its IT requirements in the island nation to IBM. It also handles the IT operations for Jersey Airtel, a subsidiary of Bharti which offers mobile services in Channel islands in Europe. Last year, IBM’s BPO arm in India bagged a six-year contract to provide voice and back-office services including customer service, collections, and customer retention for Bharti’s premium customers. After that Bharti and IBM also signed a $150-million deal under which the software major would handle all IT operations for the telcos’ direct to home (DTH) television and Internet protocol TV (IPTV) services. Beyond IT outsourcing, Bharti and IBM have also put together an unique model and invested $100 million to build a service development platform (SDP ) to tap increased revenues from value-added services. In fact, Bharti has already roped in over 200 companies including Infosys, Indiagames, Mobile2Win, Versa, Symbiotic, Pyro, Hungama and OnMobile amongst others on its service development platform (SDP ). Bharti’s SDP, which is the first-of-its-kind in India and perhaps even globally will allow these 200-plus companies to develop and offer services related to content, messaging and applications to all Airtel customers across services such as mobile, landline, broadband services or DTH service. Bharti Airtel’s director, technology and customer service Jai Menon is of the view that over 1000 companies from India and abroad, which also includes individual developers, are likely to partner its SDP by 2010.