BT and HP in £840m tie up

BT and HP have formed a partnership that could see the two industry giants launching joint products in Europe later this year.

Precise details of the strategic alliance, which was announced on Tuesday, weren't immediately available. In the short term, HP will run BT's UK IT infrastructure while BT will take over the management of HP's voice and data networks and call centres in Europe, the Middle East and Africa.

This deal will be worth a total of £840m, and will see 330 employees move between the two companies.

The long-term plans are much more ambitious. According to Tuesday's announcement, the two companies plan to deliver "enhanced service offerings to the growing global ICT market". These could go on sale to small and medium-sized businesses and consumers in the UK and continental Europe this summer, the companies said.

"The global market for ICT provides us with a substantial growth opportunity that can significantly benefit both companies’ revenues," said Ben Verwaayen, chief executive of BT, in a statement.

"In a consolidating industry, we believe it makes sense to create a strong alliance between a world-class communications company and a global IT company.”

Carly Fiorina, HP chairman and CEO, added: "Bringing together IT and communications into one seamless environment creates a solid foundation for growth."

According to sources within BT's UK operations, many of the details of the agreement are still to be firmed up. It appears, however, as if the UK's dominant telco has decided that it has more chance of turning itself into an IT services company if it can ally itself with another company with more experience in this field.

BT recently landed a number of large contracts for the upgrading of the NHS IT network. Its success in delivering these contracts will be a vital factor in its push to be seen as more than just a telecommunications provider.

The companies expect to be closely allied when attempting to sell ICT products in the future. This means that HP and BT will team up and offer joint services, plus a “sell through” approach in which HP and BT support each other’s bids, according to information available on Tuesday.

Analyst house Ovum said in a research note: "We're very happy with the two managed services contracts. Both companies are doing exactly what they preach! BT should not be managing its computers and HP should not be managing its network."

Graeme Wearden writes for ZDNet UK.