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AT&T to deliver IBM services for $1bn a year

Mutual back scratch fest

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AT&T will provide telecommunications and network management services to IBM and its customers in a pact that will generate $1bn a year for AT&T over the next five years. AT&T will also buy more technology services from Big Blue.

In a filing with the Securities and Exchange Commission, AT&T said it would transition an undisclosed number of IBM employees located in more than 30 countries.

AT&T will incur about $80m over the next 12 months buying the additional services from IBM. These additional services were not disclosed.

The bare-bones details laid out in Wednesday's filing lead us to relegate the deal as one in which AT&T scratches IBM's back in return for Big Blue scratching the back of the former Ma Bell. The filing didn't disclose how much money was already passing between the companies, so it's hard to know if the deal represents new revenue.

Indeed, AT&T said the arrangement would not have a material effect on financial results. According to Reuters estimates, analysts on average expect AT&T to post $119.3 billion revenue for 2007. ®

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