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Telefonica and IBM Argentina Sign a $250 Million IT Services Agreement

IBM Argentina to Provide IT Services for Telefonica Argentina and all its Local Subsidiaries for More Than Six Years

BUENOS AIRES, Argentina - 27 Jun 2000: -- Telefonica Argentina -- the leading telecommunications provider in the Spanish and Portuguese speaking world -- and IBM Argentina announced today the signing of an outsourcing agreement for all information technology (IT) services with a value of $252 million. Under the agreement, IBM Argentina will acquire part of Telefonica's IT assets for $37.5 million.

The announcement was made at a press conference attended by Carlos Fernandez-Prida, president of Telefonica Argentina; Enrique Balino, president of IBM Argentina; Luis Furnells, corporate CIO of Telefonica; Paul Sweeny, general manager of IBM Global Services Latin America; Fernando Miguel, CIO of Telefonica Argentina; and Guillermo Cascio, Global Services director, IBM Argentina.

Furnells said: "The association with IBM is without a doubt a 'leading case' for the world to see, not only for Telefonica; a universe of possibilities arise when two leading companies as ours join efforts to continuously improve the services rendered to their customers. It is also an opportunity for Telefonica to provide added value for its stockholders through the Veronica Project, which signifies Telefonica's commitment to reach the greatest synergy possible in the markets where Telefonica has a presence. The agreement with IBM will allow Telefonica Argentina and its subsidiaries reduce the cost of IT operations by $50 million annually, and provide access to world-class services."

"We expect this contract to represent the beginning of an on-going relationship with Telefonica, not only in Argentina but around the world," said Paul Sweeny, general manager of IBM Global Services Latin America. "Telefonica has made significant investments in Latin America, a region that represents significant growth opportunity for IBM. We will help Telefonica focus on its core business by delivering the state-of-the-art IT services it needs as one of the world's leading telecommunications companies."

IBM Argentina will provide Telefonica Argentina with a variety of high-capacity IT solutions based on world-leading technology. These services will include data center operations and maintenance, help desk, business continuity services, and distributed systems management for more than 15,000 users. Service level agreements will be implemented to ensure service quality.

As such, the development and management of strategy will remain exclusive competencies of Telefonica.

As a result of the agreement, approximately 130 IT specialists employed by Telefonica Argentina's subsidiaries will join IBM Argentina's services unit, IBM Global Services.

The agreement will allow Telefonica's customers to benefit from continuous improvements offered by the company, as the use of leading-edge IT technology and processes will increase the quality of the services offered.

"This is the largest outsourcing project that has ever been undertaken in Argentina between companies in the private-sector," said Enrique Balino, president of IBM Argentina. "I would like to thank Telefonica for the trust it is putting in IBM Argentina. All the investments we have made and will continue to make in human resources infrastructure have made this contract possible."

"Telefonica is pleased to have access to IBM's worldwide experience, which will allow us to reduce costs," said Fernandez-Prida, president of Telefonica Argentina. "By entrusting IBM with the IT management of Telefonica's various subsidiaries in Argentina, we will be able to focus on our telecommunication services, which are our specialty."

The contract, which fits in the framework of a worldwide agreement signed by both companies in March 1999, encompasses Telefonica de Argentina (TASA), the number-one private telecommunications carrier in Argentina; Advance Telecomunicaciones; Telefonica Comunicaciones Personales (Unifon); Telinver (Paginas Doradas); Telefonica Larga Distancia de Argentina (TLDA); and Telecomunicaciones y Sistemas (TYSSA).

Telefonica Argentina is part of Grupo Telefonica S.A,, the leading telecommunications provider in the Spanish and Portuguese speaking world, with presence in 24 countries, 3 continents and more than 60 million customers and $22.800 million in revenue in 1999. Once the operations in process in Argentina, Brasil and Peru are concluded, Grupo Telefonica will be the fifth worldwide operator by number of land lines, the fifth worldwide cellular operator by number of users, the second company worldwide in IP/data transmission by total revenue and the leading European Internet provider.

IBM is the largest IT company in the world, with over 75 years of business leadership and innovation in Argentina. It is the largest provider of hardware, software and IT services, and a pioneer of e-business solutions development and implementation. It has more than 300.000 employees around the world, has operations in 164 countries and invests over 5.5 billion dollars per year in Research and Development. IBM Global Services is the world's largest information technology services provider, with 1999 revenues of approximately $32 billion. Services is the fastest growing part of IBM, with more than 138,000 professionals serving customers in 160 countries. IBM has been established in Latin America for over 75 years, with over 10,000 IT professionals, of those 6,500 are services specialists. IBM Global Services integrates IBM's broad range of capabilities -- services, hardware, software and research -- to help companies of all sizes realize the full value of information technology. For more information visit http://www.ibm.com/services.

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Contact(s) information

Nancy Kaplan
IBM
(914) 766-4265
Nkaplan@us.ibm.com

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