Telecom New Zealand claims its $58 million ($NZ62.5million) buy-out of Gen-i should give the Kiwis more credibility in the Australian IT services and outsourcing market.

The deal, due for finalisation this month, involves Telecom NZ’s services arm, Telecom Advanced Solutions (TAS). merging with Gen-i. While TAS’s business is predominantly in New Zealand, the company carries out outsourcing work in Australia for the Commonwealth Bank, Toll Holdings, Goodman Fielder and Lion Nathan.

Both company names would be retained, the telco said.

As part of the new merger, the Auckland-based systems integrator will also gain a local telecoms partner - Telecom’s Australian telco-offshoot AAPT.

Both Telecom NZ and Gen-i said the merger would complement each others’ offerings and represented a move towards growth, rather than rationalisation.

TAS group general manager, Chris Quin, said the combination of TAS’s capabilities with those of Gen-i would give the combined firm a much more credible offering, and double the size of his solutions business in Australia.

Gen-i was particularly skilled in Citrix and desktop applications, while TAS came in at the carrier/networking end, he said.

“We are able to offer more to customers." Quin said. "I do not expect any job losses. We have a nice complimentary set of skills. This is not about synergy and saving headcount, it’s about growth."

Gen-i’s Australian manager, Melbourne-based Tim Ward said his company could now offer a wider range of solutions to customers.

Telecom NZ was announced as the successful applicant for the Gen-i business this week following a lengthy bidding process.

Other companies identified as potential bidders for Gen-i included TelstraClear and Volante.

That the New Zealand carrier beat its rival TelstraClear for Gen-i is an added blow for TelstraClear. With Gen-i’s largest outsourcing customers presently using TelstraClear, these customers may now switch to Telecom NZ.

The TAS/Telecom NZ takeover of Gen-i follows a recent trend for carriers to buy IT services companies.

Earlier this year, Telstra bought KAZ for $333 million. In a recent report in the Australian Financial Review, Kaz was also reported to be looking to buy rival, Locore.

KAZ marketing general manager, Kevin Ryder, declined to comment on the reports, dismissing such comments as speculation.