AT&T buys IBM Global Network for $US5 billion

Ending months of speculation about which suitor would step up to buy IBM's Global Network business, AT&T announced last week [subbed] that it will acquire the division for $US5 billion in cash.

The deal also entails the two organisations entering into outsourcing contracts with each other. IBM will outsource a large portion of its global networking needs to AT&T under a contract valued at $US5 billion, while the telecommunications giant will outsource certain applications processing and data centre management functions to IBM in a separate $US4 billion deal.

The IBM Global Network provides leased-line and dial-up service to businesses in 900 cities in 100 countries and allows individuals to access the Internet from 1350 locations in 53 countries. The network is in use by several hundred global organisations and tens of thousands of mid-sized businesses.

The company said today that it will concentrate on offering network services, such as messaging and e-commerce applications, as part of its services division, but it will no longer offer data-infrastructure services.