Germany’s T-Systems receives ‘go’ for Gedas

Deutsche Telekom AG expects to close the purchase of Gedas AG, the former computer-services subsidiary of German car maker Volkswagen AG, by the end of the month following approval of the deal Tuesday by the European Commission.

“If closing is completed as scheduled on March 31, Gedas will legally become a part of T-Systems on April 1,” said Deutsche Telekom CEO Kai-Uwe Ricke at a webcast news conference Thursday. “Gedas dovetails perfectly with T-Systems’ business operations. Thanks to Gedas’ solid international base and particular focus on the automotive sector, T-Systems will become far more competitive.”

The commission cleared the proposed acquisition after concluding that the deal would not block competition in Europe.

T-Systems International GmbH provides IT services to about 60 multinationals and 160,000 smaller companies. The Frankfurt-based unit, which also operates and maintains Deutsche Telekom’s global telecommunications network, was established a few years ago following the merger of DaimlerChrysler AG’s IT outsourcing unit, Debis Systemhaus GmbH, and the systems integration activities of the German network operator.

Gedas offers a range of information and communications technology services, including consulting, systems integration and network operation, to companies in the manufacturing and logistics sectors.

In particular, because of its close relationship with Volkswagen, the IT service provider has knowledge of business processes specific to the automotive industry. As part of the deal, the car maker will continue to work with the service provider under a seven-year IT service contract, worth $3 billion, with T-Systems.

In addition to its German headquarters, Gedas has 12 subsidiaries around the world, including Brazil, China, Japan and the U.S. Most of these are in automobile-manufacturing centers. More than two-thirds of Gedas’ 5,500 employees work outside of Germany.

Even with the Gedas acquisition, T-Systems still has a ways to go to become a leading provider of IT services in Europe, according to Cornelia Wels-Maug and Katharina Grimme, analysts with Ovum Ltd. in London. In their ranking of IT service providers in Europe based on 2004 revenue, T-Systems is the largest provider in Germany but only the eight largest in Europe.

At the end of last year, DHL Express Vertriebs GmbH & Co. OHG outsourced its IT and network technology to T-Systems. The contract calls for servicing around 8,000 workstations, 500 servers and 50 central applications. T-Systems will also integrate around 300 DHL locations into a common data network.