CBA finalising $1.3bn telco contract

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.