EDS admits WorldCom exposure

IT outsourcing giant EDS, which relies heavily on WorldCom, has promised to protect its customers from the crisis engulfing the...

IT outsourcing giant EDS, which relies heavily on WorldCom, has promised to protect its customers from the crisis engulfing the telecoms provider.

EDS signed an 11-year $6.0bn (£3.9bn) agreement in 1999, naming WorldCom its preferred supplier of telecommunications services. In a statement issued on Monday (1 July) EDS said the deal was non-exclusive and that it was confident its clients would not suffer.

"EDS utilises many telecommunications service providers around the world and is free to bid with such providers to meet the needs of its clients. EDS routinely provides business continuity and disaster recovery plans to ensure access to alternative carriers in the event of telecommunications service disruption," it said.

The outsourcer added that, "because of the critical importance of the WorldCom network globally, EDS believes the network will continue to operate".

The EDS agreement with WorldCom involves the outsourcer buying at least $400m (£262m) worth of telecoms services annually. If it is unable to meet this obligation it is required to pay WorldCom the difference.

EDS said events at the telco meant it might fail to hit that target, though it was confident of renegotiating any agreement. The outsourcer also provides IT services to WorldCom as part of an 11-year, $6.4bn (£4.19bn) deal, which was expected to contribute up to $175m (£114m) revenue in each of the last two quarters of 2002.

Some of this revenue, together with $90m (£59m) of EDS IT assets held at WorldCom sites, may be in jeopardy if the telco files for Chapter 11 bankruptcy protection.

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