IBM is to sell its Global Network Unit for nearly #2 billion, a source close to the company has told PC Week. IBM intends to retain the services arm of its Global Network Unit but will sell the infrastructure. "The reason we got into the infrastructure side was to share data among ourselves, for our own worldwide operation but also to support our customers who needed the same data services as we did," said the source. "We are not a telephone company, but there are plenty out there now with merging global infrastructures that are expanding into data and can provide the services we need." The Global Network, which grew out of IBM's internal phone system for its different outposts, is now one of the world's most widespread networks, transmitting corporate data for about 30,000 customer facilities across 50 countries. The division employs about 6,000 people worldwide, with revenues in the region of #1 billion a year. Customers use it primarily for receiving electronic orders from their own customers and to connect employees to the Internet and Email. While the network is believed to be very profitable, it is also expensive to maintain. Howard Anderson, managing director of the Yankee Group, estimates that IBM has to spend #120 million a year on upgrading it to keep up with other telecoms suppliers. "IBM is currently going through the process of liquidating all its non-strategic assets, of which the Global Networks Unit is one, to reduce a 57% debt," Anderson explained. "The network itself needs revitalisation and IBM is not prepared to fund this. IBM also faces increasingly stiff competition from rival alliances, such as the recently formed global networking alliance of AT&T and BT." A number of major telecoms companies are thought to have expressed an interest in buying the Network, although IBM refused to reveal names. Anderson believes the most likely candidates are: "Worldcom, which is desperate to build relationships with blue chip customers, of which IBM will be one; NTT in Japan which relies heavily on the Japanese market; and BT which is aggressively seeking a data intensive network." IBM refused to comment.
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