Telstra signs multi-year Microsoft deal to beef up digital arsenal

Outgoing Telstra boss Andy Penn has said a rapid shift in businesses operating digitally during the pandemic was a key driver of its landmark deal with Microsoft, which will help the telco move 90 per cent of its applications to the cloud by 2025.

Penn said the five-year deal – one of the largest for Microsoft globally – was a response to businesses moving online and using technology such as the cloud and Microsoft Teams more frequently. He said Telstra was already evolving into a digital business under a major restructure called T22, but the effects of COVID-19 on the workplace had also changed the way businesses thought about technology.

“We probably wouldn’t have been in a position to do this three years ago because we’ve completely swapped out our whole digital environment,” Penn said.

“We’ve changed by virtue of our T22 strategy, but also the world around us has changed as well. And of course, undoubtedly, Microsoft has really invested and increased its offerings and considerably expanded the functionality of many of the digital products and services that businesses are using today.”

Telstra was one of several Australian companies that decided last week it would relax office attendance requirements amid concerns of rising COVID-19 case numbers. Finding ways to improve connectivity through services such as the cloud and online video is important for companies like Telstra that move in and out of remote working models to adapt to events such as rising cases.Using cloud computing platforms also allows companies to be more agile and efficient.

For Microsoft, the deal will allow customers on Microsoft Teams, the cloud and its Xbox community to experience improved internet speeds.

“Microsoft needs more bandwidth more capacity, with greater security both terrestrially and internationally. We need to move more of our services to the cloud and all of our enterprise customers are doing the same as well as looking for productivity opportunity,” Penn said.

“What’s different [with this deal] is a manifestation or response to just how far digital adoption has gone in the last two to three years and how much use of the cloud and use of the great solutions like Teams we’re using right now.”

The five-year deal will also involve the creation of a specialised team that will sit inside technology services business Telstra Purple, which will deliver solutions from both companies to enterprise customers.