India's Hutch Essar to outsource IT to IBM - paper

Thu Mar 29, 2007 2:04am EDT

MUMBAI, March 29 (Reuters) - Indian mobile operator Hutchison Essar Ltd. may outsource its IT operations to International Business Machines Corp. (IBM.N) in a deal that could be valued at up to $1.6 billion, the Economic Times reported on Thursday, quoting sources.

The scope of the deal would depend on the growth of India's fourth-ranked mobile services provider, the paper said, adding the deal would be the largest outsourcing contract signed by an Indian operator.

"As operations ramp up, the deal size and scope is also likely to increase," unnamed sources told the paper.

Last month, Hong Kong's Hutchison Telecommunications International Ltd. 2332.HK agreed to sell its majority stake in Hutchison Essar, India's fourth-largest mobile services provider, to Vodafone Group Plc (VOD.L) for $11.1 billion. The deal is yet to be approved by Indian authorities.

Quoting sources, the paper said the outsourcing deal had been discussed with Vodafone chief executive Arun Sarin. Last year, Vodafone outsourced key IT functions to IBM, the world's largest computer services company, and Electronic Data Systems Corp. EDS.N.

Sources told the paper an official announcement of the deal was still a few months away because of regulatory hurdles before the Vodafone deal to buy into Hutch Essar was approved.

Officials at Hutchison Essar could not immediately reached for a comment.

In a separate report, the newspaper reported IBM's Indian unit had secured a $29 million order from unlisted real estate firm DLF to manage IT infrastructure.

((Reporting by Hiral Vora, editing by John Mair; Reuters Messaging: hiral.vora.reuters.com@reuters.net; +91-22-6636 9244)) Keywords: HUTCHISONESSAR IBM/

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