TechM bags Etisalat contract

Gets a portion of Rs 1,500-crore IT outsourcing deal from the UAE firm

IT solutions provider Tech Mahindra is understood to have bagged a majority portion of the Rs 1,500-crore telecom IT outsourcing deal from new operator Etisalat DB Telecom India, pipping seven other IT vendors like Wipro Technologies and IBM to the post. The deal is expected to be announced soon.

The UAE-based telecom giant Etisalat holds a 45 per cent stake in Etisalat DB Telecom India (formerly Swan Telecom).

A Letter of Intent (LoI) regarding the contract has been awarded to Tech Mahindra, while the company is yet to respond to this.

When contacted, a senior executive at Tech Mahindra said: “We do not comment on market speculation.” Executives at Etisalat DB Telecom India and Wipro Technologies also declined to comment.

Tech Mahindra has been finalised for customer billing solutions, which comprises around 50-60 per cent of the total IT contract.

The technology part of the deal is yet to be finalised, for which IBM, Tech Mahindra, Wipro Technologies and Chinese vendor ZTE Corporation are in the race, a source close to the development told Business Standard.

According to a Mumbai-based analyst, Tech Mahindra winning the deal might not come as a surprise as Etisalat had earlier awarded an outsourcing contract to the solutions provider. Tech Mahindra, jointly with Sony Ericsson, had won Etisalat’s Egypt outsourcing contract in February last year.

Indian telecom providers have been increasingly outsourcing their IT infrastructure, as it would enable them to be asset-light and concentrate on their core competencies.

While the trend was started by Bharti-Airtel’s deal with IBM which has now risen to over $2 billion, most of the telecom players have opted for outsourcing.

Recently, Wipro won a Rs 2,500-crore deal from Unitech Wireless.

In January 2008, Aircel Cellular had awarded a $600-million deal to Wipro, while Aditya Birla group company Idea Cellular had signed a 10-year IT outsourcing deal with IBM. Idea Cellular’s deal was estimated to be around $600-800 million.