Telecom Italia and HP Announce Strategic Outsourcing Agreement; Five-year Agreement Valued at 225 Million Euros.

Business Editors/High-Tech Writers

ROME and PALO ALTO, Calif.--(BUSINESS WIRE)--Feb. 21, 2003

Telecom Italia, one of the most important Italian groups, a leader in wireline and wireless telecommunication services and a key player in the ICT market, and HP (NYSE:HPQ) have reached a Management Services & Outsourcing agreement, for a duration of five years, worth 225 million Euros (approximately $244 million).

Under the terms of the agreement, HP would provide IT management services for the desktop systems of Telecom Italia's 90,000 users. As a result, Telecom Italia expects to achieve significant cost savings in the group's distributed IT environment management and be able to focus its skills and resources on its core business.

Moreover, HP would team with Telecom Italia and leverage its operational structures and skills in the SAP solutions environment for Italy. This is designed to enable the flexibility and economies of scale HP needs for its fast-growing requirements in this field. The main components of the agreement are:

-- HP will provide asset management, help desk, maintenance and management services for 90,000 users, leveraging the existing competencies of approximately 600 specialists from IT Telecom

-- the Telecom Italia Business Unit Information Technology Group -- who will join a new HP entity specialized in the delivery of such services.

-- IT telecom will host HP systems and will manage HP operations for SAP environments.

"This agreement enables Telecom Italia to reinforce its strategy focusing on its core business while further consolidating its competitiveness. The partnership with HP will result in a significant IT cost reduction and better service levels," said Arrigo Andreoni, chief executive officer and general manager, IT Telecom, "while ensuring a high level of services and quality to HP for SAP systems management."

"This agreement reinforces HP's leading position in the SAP and desktop outsourcing markets and as a provider of on-demand IT services. It also clearly demonstrates HP's innovation, efficiency and leadership in the management of IT infrastructure in complex environments," said Francesco Serafini, senior vice president and general manager for Europe, the Middle East and Africa, HP Services. "Our ability to provide services in response to different demand levels and user profiles has been a key element in our offer and supports Telecom Italia's requirements to drive more business value from its IT investments while further increasing the group's flexibility towards changing market requirements."