CBA finalising $1.3bn telco contract

CBA finalising $1.3bn telco contract

Summary: The Commonwealth Bank of Australia yesterday said it would announce the winner of its 10-year, $1.3 billion managed telecommunications deal at the end of March.

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The Commonwealth Bank of Australia yesterday said it would announce the winner of its 10-year, $1.3 billion managed telecommunications deal at the end of March.

Following incumbent supplier Telecom New Zealand subsidiary Gen-i's decision to pull out of the race last July, the race for one of the largest telco contracts in the country is believed to have been left to Australia's two largest telcos — Optus and Telstra.

"The group confirms it is progressing the RFP process for telecommunications services and all major providers, including Telstra, have been involved. It would be inappropriate to comment further," a bank spokesperson told ZDNet.com.au yesterday.

Gen-i's contract with the bank is due to expire at the end of February. Chris Quin, CEO for Gen-i Australasia said it had pulled out because of the scale and security requirements of the bank were too high, while margins on such a deal would be too low.

At CommBank's half year earnings announcement in February it reported slashing its telecommunications bill by $13 million, from $92 million in the previous half year to $79 million this half.

Should the bank's communication costs continue to fall in line with its first half result, the annual bill is likley to sit around $158 million, amounting to around $1.5 billion over a 10 year period. CBA's 2007 communications bill was AU$192 million.

A win for Telstra with CommBank would be a major relief for the telco after it was knocked out of the Australian Taxation Office's shortlist of suppliers for its managed communications contract. Optus and Dimension Data remain in that race, but at around $55 million per year, it would be less than half the size of CommBank's contract.

Topics: CXO, Banking, Outsourcing, Telcos, Optus, Telstra

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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  • Obvious Outcome

    The selection of a preferred vendor in this process has to be one of the worst kept secrets in the telco industry. Optus have been told that the bank would not be progressing negotiations, and Telstra is currently building one of the biggest transition / transformation teams likely to be used in the industry this year.

    And why hasn't Optus Business management been held accountable for the loss ?? The SingTel subsidiary is rumoured to have burnt more than $10m in bid related costs. That's got to smart with SingTel shareholders.

    In an environment where business mobile revenues are still being lost to Telstra, and the new 3dafone JV is warming up, has the Optus management team really got the luxury of risky bid decisions ??
    anonymous