Fiat has made BT its global telecoms provider in a deal worth €450m (£303m) over five years.
BT will also acquire Fiat subsidiary Atlanet for €80m. The company provides domestic telecoms services to Fiat and other business customers across Italy.
Under the services agreement, BT will manage Fiat Group's telecoms needs across 40 countries.
"This contract will enable Fiat to focus further on its core activities, while benefiting from BT's expertise in networked IT services," the companies said in a statement.
BT expects to be able to generate annual cash cost savings of around €20m by 2008, primarily through migrating traffic and consolidating networks. Atlanet will be integrated into BT's Italian operations.
"BT is delighted to have been selected by such an established and respected Italian company to be its global provider and is committed to developing a long-term partnership with Fiat that supports its transformation programme," Andy Green, BT Global Services chief executive, said in a statement:
The transaction is subject to regulatory approval and is expected to complete by February 2006.