Friday, September 25, 2009

Filled Under: , , , ,

TechM, IBM, TCS in race for $400-mn Sistema deal

Tech Mahindra, IBM and TCS are vying for a $400-million (Rs 1,800 crore) IT outsourcing contract from Sistema Shyam Teleservices (SSTL), said a person familiar with the matter.

Negotiations are on with these companies for a 10-year deal, but the contract will contain a clause that will allow Sistema Shyam to exit after five years, he said, requesting anonymity. Sistema — one of the largest public diversified corporations in Russia and the CIS — has a 74% stake in the JV with the Shyam Group that offers mobile services under the ‘MTS’ brand in India. Sistema Shyam is the only CDMA player, among the new crop of telecom operators.

“A final decision on the deal is expected to be taken by the year-end,” said Rajeev Batra, chief information officer of SSTL. He confirmed that these three IT companies were in the reckoning for the contract, but did not confirm the value of the contract.

The proposed deal will not include the operator’s BPO operations, as the telco has already outsourced its customer care operations to Essar Group’s Aegis BPO.

The winning company will manage SSTL’s IT systems across the 22 telecom circles in the country. SSTL, which is scheduled to launch telephony services in Delhi next month, plans to be a pan-India operator by the third quarter of next year. While a senior Tech Mahindra executive confirmed that the talks with SSTL were on, the TCS spokesperson declined to comment. But, TCS had earlier said it was aggressively chasing deals in telecom, financial services, life sciences and retail.

IT major IBM, too, did comment on being in the race for the SSTL contract. Early this year, SSTL had tied up with IBM for designing and building its green data centres in Chennai and Gurgaon.

SSTL executives said the company was exploring an operating expenditure model for this IT outsourcing contract. This model of outsourcing is considered more cost-efficient for companies since it allows the IT partner to take the telco’s IT assets on its books. While SSTL is yet to award its IT contract, most other new operators have already done so. Etisalat DB recently awarded the contract worth $400 million to Tech Mahindra, while Datacom’s IT infrastructure management has been awarded to IBM for about $200 million.

Unitech Wireless, in which Norway’s Telenor holds a controlling stake, has outsourced its IT infrastructure management to Wipro for about $500 million.

SSTL was among the nine new companies that were given licenses early past year to launch mobile services. So far, the company has launched CDMA-based services in six circles and has about two million customers in its network.

The country has seven pan-India mobile phone operators led by Bharti Airtel, Reliance Communications (RCOM) and Vodafone Essar. A string of new players like Datacom, Loop, S Tel, Unitech Wireless and Swan are also in the process of rolling out nationwide services.

The country has close to 450 million mobile subscribers and a telecom penetration of over 41%.


Post a Comment

Blog Archive