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Cable & Wireless Goes VoIP in US $1.4 billion Nortel Deal

[London, ENGLAND] Global telecom group Cable & Wireless announced Monday that it will spend US $1.4 billion over 10 years with Nortel Networks to transform its switched network to voice over IP (VoIP).

The provisional agreement with Nortel Networks is for a ten-year contract, although transforming the network is expected to take just three years. After building the network, Nortel will continue to manage it via its Global Professional Services group.

Mike McTighe, chief executive Global Operations, Cable & Wireless, said that with this milestone agreement his company was taking a lead in voice over IP, addressing both the national and international voice business.

"Our full-service IP network will give customers better end-to-end control, a wider variety of high quality applications and more cost efficient voice services," said McTighe.

The Cable & Wireless VoIP backbone network will extend throughout Europe and North America. Employees at Cable & Wireless who manage its existing voice network will transfer to Nortel Networks.

Clarence Chandran, chief operating officer, Nortel Networks, called it a landmark project for the Global Professional Services group.

"Nortel Networks will enable Cable & Wireless to radically change its business model to capitalize on the Internet economy," said Chandran.

The two companies will thrash out the details of their agreement between now and the end of the year when a definitive contract is expected to be signed. Monday's announcement refers specifically to the signing of a memorandum of understanding.

Broadly, the terms of the agreement will be based on the premise that Cable & Wireless will retain full control of the network architecture, the design of the VoIP platform, while also keeping responsibility for customer relationships.

Nortel Networks will manage circuit switches on the Cable & Wireless network in the U.S. and Europe, build a VoIP platform, and migrate the traffic from the legacy network to the new one.

Cable & Wireless had revenues of US $14 billion to end of March 2000; Nortel Networks had 1999 U.S. GAAP revenues of US $21.3 billion.



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