Jet engine maker Rolls-Royce has signed a $20 million seven-year deal with Nortel that will see Nortel replace a global TDM phone network with IP-based voice and fax services.

The company will use Nortel equipment that will run on Rolls-Royce's existing LANs.

Some 26,500 staff working in Rolls-Royce power systems and services divisions in Europe and North America will benefit from new phone services which will transform the way they work, claimed Nortel global accounts VP Mike Gibson.

"The offices of a global organisation traditionally have different technology, different costs, different services and service levels," he said.

"We are giving Rolls-Royce a uniform service level and cost, with familiar technology in every office, so staff can log-on and work anywhere."

He claimed that, far from being a risk, Rolls-Royce's choice of a Nortel-only infrastructure - including comms servers, unified messaging and mobility systems - should benefit the organisation: "To get the advantages from IP telephony you still have to go single-vendor for uniformity of equipment, service and so on."

The deal is just a few weeks old, but 700 Rolls-Royce staff are already using Nortel-managed IP telephony.

Gibson said that the deal includes Nortel taking over the management of existing TDM equipment, and that Rolls-Royce divisions will be migrated to VoIP in the coming months as and when it makes business sense for them - for example, when their PBXs come up for replacement.

"It is a milestone win for our services group," he added. "We have larger customers among carriers, but this is the first transformational win for Nortel. It's a big deal for us in the enterprise market."

Like many other companies, Nortel is attempting to build up its services arm. It currently makes up 20 percent of Nortel revenue, but CEO Mike Zafirovski wants that to reach 50 percent over the next few years.