In a major deal announced yesterday, British Telecom (NYSE:BT, news, filings) and Tata Communications (news, filings) have signed a five year global strategic voice services agreement. Tata has now become BT’s primary supplier outside of its main footprint, and BT will supply Tata with access to the UK market and later Europe. This alliance is a natural one since the two multinationals have rather complementary assets and customer bases. With carriers of all stripes less and less interested in spending capex these days, we will likely see more of these alliances.
BT in particular has been struggling outside of the UK, and this move can be seen as part of an attempt to refocus their efforts on data and the corporate market. But it’s not just BT that is thinking about such things. The international wholesale voice business is one of low margins where scale is critical and which many carriers are less and less interested in spending money on. Similar reasons underly KPN’s move a few years ago when it took its international voice unit and merged it into iBasis, and also why Denmark’s TDC outsourced its international termination needs to that combined entity.
While Tata’s core is as an Indian PTT, their international arm comes largely from its acquisitions of the Tyco Global Network and of Teleglobe, which itself had bought international VoIP wholesaler ITXC. It is those Teleglobe assets that drove this deal with BT, they have the scale to make it worthwhile to carry all those international voice minutes and therefore are a magnet for others looking to simplify things.
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