T-Systems to sell mainframe unit to IBM in $986-million deal: Report

Deutsche Telekom's struggling IT services and consulting business T-Systems is selling its mainframe service business to U.S. firm IBM, a newspaper reported on Sunday.

The Handelsblatt daily cited an internal memo which said 400 employees in six countries would switch to IBM in May.

Tech news site IT-Zoom reported that IBM will pay 860 million euros ($986.16 million)for the business, although T-Systems will not completely exit the mainframe business but offer services in future with IBM.

A spokesman for T-Systems declined to comment on the price but confirmed that the firm was deepening its cooperation with IBM in mainframe services and would operate together from May.

"Existing customer contracts remain unaffected. T-Systems will continue to offer mainframe services, but with IBM in the future," T-Systems said in a statement, noting the agreement was still subject to approval by anti-trust authorities.

IBM was not immediately available to comment.

The move is the latest by American turnaround specialist Adel Al-Saleh, who took over at T-Systems a year ago, after Deutsche Telekom was forced to book a big impairment charge against goodwill for the loss-making business.

Al-Saleh announced plans last June to cut 10,000 jobs in a three-year drive to return to profitability.