UPDATE 2-AT&T, T-Systems and EDS win 5-year Shell contracts

(Recasts with AT&T interview, changes dateline from FRANKFURT)

NEW YORK/FRANKFURT, March 31 (Reuters) - Top U.S. phone company AT&T (T.N) and a Deutsche Telekom (DTEGn.DE) unit won five-year contracts worth around $1.6 billion each to provide communications and technology services to Royal Dutch Shell Plc (RDSa.L).

Royal Dutch Shell also signed a $1 billion outsourcing deal with Electronic Data System Corp EDS.N as part of the oil company's efforts, unveiled in December, to cut costs by outsourcing a substantial part of its technology operations.

The move comes as global corporations like Shell seek to upgrade their networks to enable more Internet-based communications. Many businesses are also trying to simplify the management of their various communications and technology contracts.

AT&T said it will manage Shell's local phone and mobile communications services throughout the world, and offer access to AT&T's global, Internet-based network.

Around 560 Shell employees in the Netherlands, Malaysia, the United Kingdom and the United States are due to join AT&T's payroll of 300,000 workers worldwide.

AT&T, which has also struck networking contracts with International Business Machines Corp (IBM.N) and General Motors Corp (GM.N), said it is negotiating more corporate contracts and that a slower U.S. economy is not hurting such talks.

"We are involved with a number of similar-type bids, and it really cuts across a number of verticals from an industry point of view," Ron Spears, AT&T's president of global business services, told Reuters in a phone interview.

"I haven't seen anything that's causing negotiations to be disrupted," he said.

AT&T shares rose 2.1 percent to $38.45 by midday.

BIGGEST DEAL FOR T-SYSTEMS

Deutsche Telekom's business client unit T-Systems, which this month announced an alliance with U.S. IT services provider Cognizant (CTSH.O), said the 1 billion euro ($1.58 billion) deal was the biggest in its history and would increase revenue from abroad by more than 20 percent.

Last year, T-System had sales of 12 billion euros, of which 2.5 billion euros were generated outside of Germany.

T-Systems said it will take over the infrastructure and organization of IT professionals at Shell's global data centers, including three in the Netherlands and one each in the United States and Malaysia.

It also plans to move its U.S. headquarters to Houston, Texas, from Lisle, Illinois, and make Malaysia a center for service management, turning the data set-up there into its operational hub for Asia-Pacific.

It said it had the option to extend the contract with Shell for global hosting and storage services after five years.

T-Systems is Deutsche Telekom's smallest and least profitable unit and provides IT and telecoms services for companies such as carmakers BMW (BMWG.DE), Daimler (DAIGn.DE) and Volkswagen (VOWG.DE), as well as for German federal and municipal governments and European public administrations.

Last March, Deutsche Telekom said it was looking for an international company to buy into T-Systems but, in the course of the year, said it was seeking a partner only for the systems integration part of the business.

Deutsche Telekom stock fell 1.6 percent to 10.55 euros, while the DJ Stoxx telecoms index .SXKP fell 2.1 percent. (Reporting by Nicola Leske and Ritsuko Ando; Editing by Brian Moss and David Hulmes)