Qwest Communications and IBM Announce $5 Billion Strategic Relationship

Agreement Establishes the Companies as Preeminent Leaders for Hosting Services

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SOMERS, N.Y - 27 Mar 2000: -- IBM and Qwest Communications International Inc., today announced a multi-year initiative to deliver next generation e-business services and applications through the creation and deployment of new Qwest CyberCenterssm, the company's state-of-the-art Internet data centers. More than $5 billion in revenues is expected from the agreement and will be split almost equally between the two companies. This relationship is one of the largest to be forged between a network services provider and an information technology company.

Qwest has selected IBM Global Services to build and provide operational support for 28 new CyberCenters over the next three years. The first four centers, which are expected to be operational later this year, will be located in Dallas; Philadelphia; Sterling, Va.; and the San Jose, Calif. area. In addition, IBM-built CyberCenters are currently planned in such cities or regions as: Atlanta, Austin, Boston, Chicago, Denver, Los Angeles, Washington, D.C., New York City, Phoenix, Silicon Valley, and Seattle.

By the end of 2000 Qwest plans to have 14 U.S. CyberCenters in operation. Once all planned IBM-built CyberCenters are completed, Qwest expects to operate a total of 42 CyberCenters in the U.S. and Canada.

IBM will purchase hosting space to support its customers' e-commerce initiatives and will become the anchor tenant in the CyberCenters it builds. At the new centers, Qwest and IBM plan to deliver the widest spectrum of e-business services ever to be offered under one roof -- from colocation, to complex integrated Web hosting solutions, to application service provider platforms. These new CyberCenter operations will be directly connected to Qwest's high-performance broadband Internet network. Together, IBM and Qwest expect to deliver new standards for performance by offering end-to-end service level agreements to cover the entire Web transaction process.

The two companies expect to continue to lead in the fast growing Web hosting marketplace, which Frost & Sullivan estimates will be worth more than $35 billion in the U.S by 2005. Target customers will include dot-com companies, Fortune 1000 companies migrating their business processes to the Web, intermediaries running e-marketplaces, and application service providers.

IBM plans to enhance the services it offers to its Web hosting customers in existing IBM Internet data centers by adding connections to Qwest's high-speed, nationwide network. In addition, IBM will work with Qwest to deliver technology that supports and expands the broad portfolio of hosting services offered through both new and existing CyberCenters.

IBM, which manages more than 40,000 servers in 133 data centers worldwide is the global leader in Web server management. The company has more than 15,000 e-business services professionals worldwide. These strengths, combined with Qwest's industry-leading IP networking capabilities will provide flexible, reliable, scalable, high-performance hosting services for customers who rely on outsourced mission-critical applications for continued growth and global expansion.

"Our strategic relationship enables next-generation broadband applications and services for customers by bringing together the industry's best information technology and services from IBM with the world's best broadband Internet network," said Lew Wilks, Qwest's president of Internet and Multimedia Markets. "We can improve customers' financial performance, lower their capital costs and cut the time needed to introduce new e-business services. All of this, while providing one of the industry's most secure, highly scalable solutions."

Doug Elix, IBM senior vice president and group executive, IBM Global Services said: "This alliance represents an important step in expanding IBM's spectrum of Web hosting services, from basic colocation to managed services to fully outsourced operations. We will use our experience in managing complex Web sites to help our customers choose the best mix of services for their needs. Our alliance with Qwest demonstrates how leaders in the information technology and Internet communications industries can collaborate to help companies worldwide become e-businesses."

Most of the new facilities will be built to a minimum of 100,000 square feet and all will have a direct connection to Qwest's leading Internet network, giving customers direct, scalable, high-speed access to their information.

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