WilTel Communications and SBC Communications Inc. said today they have extended their relationship by signing a new master services deal good through 2009.
WilTel, the Oklahoma-based wholesale carrier, earlier this year feared it could lose business with its biggest customer SBC if the No. 2 local phone company bought AT&T Corp. Fitch Ratings even had lowered its long-term rating on WilTels parent, Leucadia National Corp., a holding company in New York, because of that possibility. Leucadi warned, too, that if SBC ended its preferred provider relationship with WilTel, it would create an enormous gap in revenue for WilTel and trigger a default under WilTels credit facility unless the default was waived by its lenders.
Todays announcement, though, erases those concerns for about the next four years. SBC says it will continue using WilTel services throughout the planned AT&T acquisition and integration process.
The agreement also calls for WilTel to be a preferred long-term provider of the combined SBC/AT&T for off-net and other network services.
WilTel was critical to SBCs nationwide launch of long-distance voice and data services, says Bob Ferguson, group president and CEO for SBC Enterprise Business Services. Our top priorities during the planned AT&T acquisition process are to ensure security and reliability for our customers. This agreement with WilTel is designed to facilitate those efforts and to enable us to provide even greater network diversity options for our customers moving forward.
The contract which replaces the alliance agreement the two companies formed in 1999 includes purchase commitments from SBC and performance incentives. SBC and WilTel will reveal more of the deals financial details in SEC filings.