Telstra inks contracts worth $5 billion in IT transformation

Telstra has inked more than $5 billion in contracts as part of the massive revamp of its Internet protocol (IP) network and third generation (3G) mobile phone platform.

The telco has clinched a $3.5 billion deal with France-based communications solutions provider Alcatel to help build Telstra's new IP network. Alcatel will be primarily responsible for design, integration, product supply and ongoing support of the telco's network.

As part of a strategic technology review announced yesterday, Telstra will reduce its 334 networks by up to 65 percent over the next five years and will collapse its three mobile networks into a single, 3G high-speed network under a three-year plan.

Chief operations officer, Greg Winn, said the telco has signed a deal worth more than $1 billion with Cisco which will build Telstra's IP core, and Ericsson will roll out the national 3G platform.

"The Alcatel contract is in excess of $3.5 billion; it's fair to say that the Ericsson contract is well north of $1 billion and the Cisco contract is well north of $1 billion," Winn said.

"These numbers can move a couple of hundred millions of dollars either way."

Moreover, Winn said Telstra will spend more than $1.5 billion on "IT transformation".

"I'm not going to reveal the other parts, because we're in ongoing commercial negotiations," Winn said.

"And obviously we have lot of suppliers that are fighting for the right to be Telstra's preferred suppliers."

He said Telstra will make further announcements in the coming weeks about how the remainder of the money will be carved up.

The announcements are part of the company's overhaul that will include cutting up to 12,000 jobs over the next five years to reduce its costs.

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