BT is in talks to sell its UK data centres to HP, according to a report in the Sunday Times.

The deal, thought to be worth £1.5bn, is predicted to deepen the UK telco's ties with the US computer giant, with the pair jointly bidding for contracts more often.
Rumours of a possible merger, however, have been played down.

BT is said to be concentrating its global services division on simplifying
networks for corporate customers, hiving off data storage to HP. If the deal
goes ahead, 400 hundred BT staff will transfer to HP.

In exchange for selling its data centres, BT would take on the management of HP’s
voice and data networks globally.

Outgoing chief executive Ben Verwaayen made global services BT’s largest revenue
generating division, but the division must meet improved margin targets - from
11 per cent to 15 per cent by 2010, through cost cutting.

Verwaayen will be formally replaced by Ian Livingston, BT’s retail chief and
former finance director, on 1 June. BT has been reshaped around broadband access
and IT services under Verwaayen’s leadership but investors reportedly grew wary
of the need for massive future investment in the new networks – such as the long
awaited 21st Century Network.