Telstra boosts network services division with AU$60m O2 acquisition

Telstra is looking to boost its consultancy offerings in the network market, with the acquisition of Melbourne-based O2 in a deal said to be worth AU$60 million.

O2 has been a partner of Telstra's for more than a decade, and provides network integration for 370 customers with its 100 staff members.

Telstra's Network Applications and Services (NAS) executive director Michelle Bendschneider said the decision to take over the company — in a deal that industry sources state is worth approximately AU$60 million — was to meet the desire for the growing NAS division to also be able to provide advice to customers on the best technology choices, over and above the network options.

"We didn't really have enough consulting capability to go in unattached to any particular technology in an agnostic manner and help advise our customers around what they should be choosing, what they should be doing with their current environments, what they should be considering in a tech refresh cycle, how they get from point A to point B, and this is the whole purpose of establishing this NAS consulting service, which I lead," she told ZDNet.

"Aside from being a really known partner for Telstra, O2 is really strong in not only the established player capabilities like Cisco and Juniper, but also picking, and backing, and quickly growing capability in emerging vendors."

In addition to the NSC acquisition in August, Bendschneider said that once the integration of the two companies into Telstra has been completed, Telstra will have added 300 consulting staff members and over 1,000 customers in that market.

O2 managing director and co-founder Euan Prentice told ZDNet that the rationale behind Telstra's offer made sense immediately.

"It's funny, when you look at these things, you can have acquisitions come across the table and you can sometimes spend too much time thinking what the synergy is, and sometimes it just screams at you. This was certainly that case," he said.

"The overwhelming reason was to build on what we've already done. I'm justifiably proud of what we've achieved, but at the end of the day, as good as we are, we probably cover maybe 15 to 20 percent of the large corporate clients in Australia. We do a fabulous job with that, but ultimately, we don't have that kind of reach that Telstra has."

Prentice said that O2 would now also reach into Asia as Telstra expands its presence in the region.