TechM wins $50-m Saudi Telecom deal

Close on the heels of clinching an IT outsourcing deal with Etisalat DB, the Indian arm of Emirates Telecom, Tech Mahindra is learnt to have won another deal for a greenfield IT implementation for a telecom major in the Middle East. The IT firm has won a deal with Saudi Telecom, which is rolling out GSM services in Bahrain, said a person familiar with the development.

Saudi Telecom competes with Etisalat and the Zain consortium in its home market. The largest telecom operator in West Asia, Saudi Telecom also has a presence in Indonesia, Malaysia, Turkey, South Africa, Lebanon, Jordan, and Kuwait. In India, it has a presence through a 25% stake in Maxis Telecom, the Malaysian operator that is the majority stakeholder in Aircel. Earlier this year, it bagged the licence for the third-mobile operator in Bahrain.

“The deal with Tech Mahindra includes IT implementation and managed services. It is one of the largest deals for Tech Mahindra in the region,” said the person quoted earlier. He said the deal size could be between $40 million and $50 million. Multinational firms Hewlett Packard and Cisco, which provide server and networking hardware, have also won different parts of the deal. Tech Mahindra shares fell marginally on Monday to Rs 937.75 on BSE.

A Tech Mahindra spokesperson responded to an e-mail from ET saying, “As a corporate policy, Tech Mahindra does not comment on any market speculative stories.” Tech Mahindra, which is focused on exclusively on outsourcing services to the telecom sector, is facing growth challenges from its number one customer and shareholder, British Telecom. In the recent past, it has clinched several deals in emerging markets, such as India, Middle East and Africa, where the telecom market is still witnessing a rapid growth. Saudi Telecom, for instance, has announced investments of around $3 billion in the telecom markets of India, Malaysia and Indonesia.

Tech Mahindra is also the largest stakeholder in the scam-hit Satyam Computer Services. The Tech Mahindra management has publicly stated that it intends to eventually merge both companies giving it a presence in all sectors.