CBA shuns local telcos

The Commonwealth Bank has selected a Telecom New Zealand-led consortium for its long-awaited telecommunications outsourcing contract.

Exact details of the agreement are still being fleshed out, but CBA and TNZ have entered into final negotiations for the five-year, $500 million contract.

The announcement comes as a major blow to Cable & Wireless Optus, which had also been shortlisted for the contract. The deal also sees Telstra lose one of its major corporate contracts. Telstra, Vodafone and CWO each currently supply telecommunication services to CBA.

Under the deal, TNZ, in partnership with AAPT, Cisco, Com Tech and EDS, will provide telecommunications services, including infrastructure, integrated voice, data and video services over an IP network, remote access, international network services, and risk, security and performance management.

While CBA will still use services provided by other carriers, TNZ will manage all of the bank's telecommunications operations.

"The bank will only pay for what it uses without having to meet the fixed costs associated with the installation and maintenance of infrastructure," said Russell Scrimshaw, CBA's head of technology, operations and property division.

Much like CBA's 10-year IT outsourcing agreement with EDS signed in 1997, the shift to outsourcing is expected to generate savings in the bank's telecommunications costs of around 20 per cent per year. CBA's current telecommunications expenditure was unknown.

Meanwhile, Telecom New Zealand chief executive Theresa Gattung said the agreement is important in building TNZ's presence in Australia. "It gives powerful support to our Australasian-wide growth strategy," she said.

CBA was not available for comment before press time.

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