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Shell Said to Renew 1 Billion-Euro Deutsche Telekom Data Deal

By Cornelius Rahn on July 05, 2012

Deutsche Telekom AG (DTE)’s T-Systems unit won an extension of a 1 billion-euro ($1.2 billion) deal to manage the data center infrastructure of Royal Dutch Shell Plc (RDSA), two people familiar with the matter said.

The initial outsourcing contract, signed in March 2008, will be extended by at least another five years, the people said, asking not to be identified as the agreement hasn’t been announced yet. Under the deal, T-Systems is moving data into a cloud computing infrastructure, meaning Shell can access information and services remotely, without having to maintain its own servers, one person said.

T-Systems, whose sales of 9.2 billion euros accounted for 16 percent of Bonn-based Deutsche Telekom’s revenue last year, is promoting cloud services as a way for clients to reduce information technology spending and facilitate data access. The unit is trying to standardize and speed up its processes, meaning employees won’t have to start from scratch on new projects, after the division’s profitability dropped last year.

T-Systems this year announced outsourcing contracts with companies such as U.K. insurer Old Mutual Plc (OML) and British American Tobacco Plc. (BATS) When T-Systems announced the Shell deal in 2008, it said it would take on about 900 employees of the oil company and five data centers and turn the data center in Malaysia into its operational hub for the Asia-Pacific region.

A representative for T-Systems declined to comment. The business, Europe’s largest provider of cloud-computing services, is currently also taking over the management of its parent’s internal computer and communications systems.

T-Systems, whose European operations include sites in Debrecen, Hungary and St. Petersburg as well as in the Czech Republic, partnered with Cognizant Technology Solutions Corp. (CTSH) (CTSH) in 2008 to expand its reach and cut costs.

Deutsche Telekom dropped 0.1 percent to 8.66 euros in Frankfurt, valuing the company at 37.4 billion euros. The stock has declined 2.4 percent this year.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at [email protected]

To contact the editor responsible for this story: Kenneth Wong at [email protected]


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