T AT&T Inc

By Agam Shah 

International Business Machines Corp. said Tuesday that AT&T Inc. is shifting its business service applications to IBM's cloud. The terms weren't disclosed, but IBM said the multiyear deal is worth billions of dollars.

The IBM cloud competes with larger rivals such as Amazon.com Inc.'s Amazon Web Services, Microsoft Corp. and Alphabet Inc.'s Google.

The partnership builds on IBM's $34 billion acquisition of open-source software firm Red Hat, which closed last week. Buying Red Hat strengthened IBM's standing in the hybrid cloud market. Companies use the hybrid cloud to manage software and other systems across different cloud services and their own data centers.

IBM said that Red Hat's open-source software will give AT&T Business the flexibility to move data and applications among various clouds and data centers. AT&T Business until now has worked with multiple cloud vendors.

Thaddeus Arroyo, chief executive of AT&T Business, said in a statement that the IBM deal lets the company adopt "open, flexible, cloud technologies that will ultimately help accelerate our business leadership."

IBM will also tap AT&T as its primary source of software-defined networking, building on an existing partnership between the companies. The method uses software instead of hardware to manage applications and users on enterprise networks.

AT&T Business generated $37 billion in revenue in 2018, about 22% of AT&T's total revenue of $170.8 billion.

Moving its core business applications to the IBM cloud will help AT&T deploy new services to existing enterprise customers faster, IBM said. AT&T Business also will use IBM's artificial-intelligence applications for a range of services, IBM said.

"It really allows much faster provisioning of new services into the network, and lowers cost as everybody is expanding network capacity," said Arvind Krishna, senior vice president of cloud and cognitive software at IBM.

Write to Agam Shah at agam.shah@wsj.com

(END) Dow Jones Newswires

July 16, 2019 19:06 ET (23:06 GMT)

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