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NCR Corp. (NCR - Analyst Report) recently announced that it has sealed a 5-year service deal with British Telecommunications plc (“BT”), a wholly-owned subsidiary of BT Group plc (BT - Snapshot Report). Financial terms of the deal were not disclosed.

British Telecom’s corporate customers are scattered over 100 countries across the world. The company’s commitment toward customer satisfaction with the help of its secure and scalable connectivity solutions has led to a steady demand for its services. Keeping pace with the growing population and demand for data and voice exchange activities, BT intends to provide an extensive set of solutions and services to ensure customer satisfaction. To achieve this goal, BT chose to rely on NCR’s service capabilities.

Per the deal, NCR will provide support toward BT’s connectivity solutions (Converged LAN Connect and IPT solutions) with its cost-effective delivery and integration services. NCR’s services will allow BT to improve its customer productivity and interaction speed on a global basis, at an economical price.

NCR has years of experience in serving the telecom industry. As per internal sources, NCR maintains account with 8 of the world’s top 10 telecom firms. Association with BT will further solidify its position in the industry and we expect similar deals to chip in following the success of the BT deal.

NCR’s telecom business operates under its Emerging Industries segment. The segment posted a 5.0% revenue decline in second quarter results, mainly due to lower product sales and services revenue generated from the Americas and negative currency impact.

However, impressive growth at its Financial Services segment and cost reduction measures led NCR to report decent second quarter earnings, well ahead of the Zacks Consensus Estimate.

But stiff competition from Diebold Inc. (DBD - Snapshot Report) and Wincor Nixdorf in the ATM market and a high debt burden keeps us concerned.

Currently, NCR has a Zacks #3 Rank, implying a short-term Hold rating.

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