Bharti and IBM Announce First-of-a-Kind Business Transformation Agreement in Global Telecommunications Industry

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NEW DELHI, India - 26 Mar 2004: Bharti Tele-Ventures Ltd., India's leading telecommunications conglomerate, and IBM India today announced a long term on demand business transformation agreement. This agreement will enable Bharti Tele-Ventures to deliver world-class telecommunication services to the Indian market and support its business growth.

The comprehensive agreement between Bharti Tele-Ventures and IBM India encompasses three components:

1. A first-of-a-kind initiative to consolidate, transform and manage comprehensive Information Technology (IT) infrastructure and applications.

2. The joint development and marketing of IT and telecommunications solutions and services for India.

3. Bharti Tele-Ventures to be a preferred supplier of telecommunications services to IBM India.

Announcing the agreement, Mr. Sunil Bharti Mittal, Chairman and Managing Director, Bharti Enterprises, said, "The partnership with IBM is set to redefine the existing paradigms in the telecommunication industry. It will add unparalleled value to Bharti at multiple levels, be it for our customers, employees and shareholders. The agreement demonstrates our strategic intent to create a globally admired telecommunication company. With predictable IT spend, improved cash flow and optimized use of technology resources, the agreement with IBM will enhance Bharti Tele-Ventures' shareholder value."

Ms. Colleen Arnold, General Manager, IBM Communications Sector, Worldwide, said, "We believe the next big thing in technology isn't technology itself, but a better way to make it work. With this on demand agreement, Bharti Tele-Ventures will be able to take advantage of IBM's innovative technology coupled with our business expertise in working with telecommunication service providers worldwide. We will enable Bharti Tele-Ventures to adapt to changing market conditions and increase speed-to-market of new and innovative offerings for customers."

Telecom solutions powered by a world class IT architecture
Bharti currently has a leading presence in all the areas of telecommunication services and plans to expand its footprint in India, thereby increasing its IT and connectivity needs. Bharti Tele-Ventures' collaboration with IBM will draw an IT roadmap with a state-of-the-art infrastructure to support its existing and new business operations. The result is a strategic, on demand business transformation agreement capable of servicing the needs of millions of customers.

This business transformation will involve outsourcing Bharti Tele-Ventures' hardware, software and IT services requirements to IBM. This includes all customer-facing IT applications, such as billing, customer relationship management (CRM) and data warehousing. In addition, IBM will service Bharti Tele-Ventures' internal-facing applications, for example, intranet, email and online collaboration. On the infrastructure front, IBM will consolidate Bharti Tele-Ventures' data centers, IT help desks, and enhance its disaster recovery capabilities.

IBM will deploy an open standard-based framework, Service Provider Delivery Environment (SPDE), allowing Bharti Tele-Ventures the flexibility to introduce the latest in voice, data and content-based services to its customers. This superior IT architecture will allow Bharti Tele-Ventures to adapt to rapid changes in technology, as well as provide a greater level of freedom and flexibility to enhance customer experience.

The agreement specifies that the payment made to IBM India will be linked to the percentage of revenues generated by Bharti Tele-Ventures and pre-defined service-level agreements. Based on estimates agreed between Bharti and IBM, the total deal for the first five years is estimated to be in the range of US$250-US$275million, the total deal, over a 10-year period, is likely to be in the range of US$700-US$750million. The percentage-linked revenue payment is modelled to decrease with the increase in Bharti Tele-Ventures' revenues.

Under the provisions of the agreement, employees currently involved in the operation and maintenance of the IT infrastructure of Bharti will be transferred to IBM.

Joint go-to-market services
Bharti Tele-Ventures and IBM will pursue joint go-to-market opportunities and avenues for selling value-based services in the areas of communications, IT services and convergence. These will bring together Bharti Tele-Ventures' leading-edge network and integrated communications service-provider capabilities with IBM's unparalleled innovation and technology leadership. The joint go-to-market initiative would thus provide the benefits of seamless communication and computing to corporate and enterprise customers, such as e-business hosting services and business continuity and recovery services. The initiative will also introduce application services to the small business and mass market segments including online content and managed e-mails. The collaboration is backed by resource investments from both parties.

Bharti identified as a preferred supplier of telecommunication services to IBM India
IBM India has identified Bharti Tele-Ventures as a preferred supplier of telecommunications services, such as bandwidth, satellite connectivity, last-mile wireless and wireline access, and national and international long distance communication solutions. This relationship will allow IBM to leverage Bharti's unparalleled telecommunications capabilities across wireless and wireline services.

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