IBM Corp. has landed a multiyear cloud computing deal with AT&T Inc. that will see the carrier move a large number of internal workloads to the IBM Cloud.

The companies didn’t divulge the exact duration of the agreement, which was announced this morning. But an IBM spokesperson did disclose to CNBC that the deal will be worth billions of dollars over its lifetime.

Under the agreement, AT&T Business Solutions, the division of the carrier that provides network services to corporate customers, will shift its operational applications to IBM Cloud. The migration is set to include an extensive software modernization effort. The companies said that the carrier will use IBM’s expertise to refactor legacy workloads that can’t be easily migrated to the cloud.

That indicates the deal has a sizable professional services component, something IBM specializes in. In turn that may explain some of the appeal of IBM Cloud to AT&T even though it trails far behind cloud infrastructure leaders such as Amazon Web Services Inc., Microsoft Corp.’s Azure and Google LLC.

Red Hat is also set to play a role. The company, which was acquired by IBM for $34 billion in a deal that closed this month, already counts AT&T as a customer of its RHEL Linux distribution. AT&T Business Solutions will use RHEL and OpenShift, Red Hat’s toolkit for managing cloud-based applications, to support the workloads being migrated to IBM Cloud.

The deal is a sign that IBM’s $34 billion acquisition of the Linux distributor is already paying dividends. The fact that AT&T is an existing Red Hat customer may have very well played a role in helping IBM beat out rival cloud providers, namely AWS, Microsoft and Google. IBM itself also boasts a long-running relationship with the carrier.

“Clearly Red Hat gives IBM a better position” to run hybrid and multicloud network, Dave Vellante, chief analyst at SiliconANGLE sister research firm Wikibon, said recently. “Hybrid/multicloud is complex. IBM loves complexity, and its services organization is No. 1 in the industry.”

“Building on IBM’s 20-year relationship with AT&T, today’s agreement is another major step forward in delivering flexibility to AT&T Business so it can provide IBM and its customers with innovative services at a faster pace,” Arvind Krishna, IBM’s senior vice president of cloud and cognitive software, said in a statement.

The deal represents an especially big win for IBM because it also extends beyond AT&T’s Business Solutions division. Under the agreement, the carrier will tap IBM to help maintain both its cloud-based and on-premises technology infrastructure. IBM, in turn, is designating AT&T as its primary provider of software-defined networking services.

This latter tie-up includes a planned collaboration on “edge computing platforms.” The companies didn’t go into too much detail, saying only that the goal is to help enterprises take better advantage of the high-speed 5G wireless infrastructure AT&T is currently rolling out.

The agreement is the latest and biggest among a series of high-profile deals that IBM has announced this year. Previously, the company struck a $700 million contract with European banking giant Banco Santander SA to support its digital transformation initiative. IBM this year also nabbed a $325 million cloud deal to help Juniper Networks Inc. manage its technology infrastructure.

Photo: George Rex/Flickr