Telstra merges services businesses to stave off multinational threat

Telstra has moved to buttress its services business against competition from multinational providers by merging the recently-acquired Kaz Group with its existing Services Solutions group to create a Kaz-branded organisation whose annual revenues will approach AU$1 billion.

Telstra has moved to buttress its services business against competition from multinational providers by merging the recently-acquired Kaz Group with its existing Services Solutions group to create a Kaz-branded organisation whose annual revenues will approach AU$1 billion.

The telecommunications heavyweight also denied that the combined organisation's management structure -- which sees Kaz chief executive officer Peter Kazacos and Telstra Services Solutions managing director Mike Foster act as joint managing directors -- is temporary, with the ultimate aim being to shift out one of the two and leave the 3,500 staff-strong organisation in the hands of the other.

Telstra said the new organisation would "more effectively compete against foreign multinationals, contest new markets and protect the existing customer base".

The business will focus initially on both the corporate and medium business markets, with the managed desktop services currently available to corporate customers being launched to medium-sized customers, Telstra said. "Kaz will also utilise its existing data centres and those of Telstra centres to offer customers additional services such as utility computing, bandwidth on demand and hosting and storage in more cities".

A Telstra spokesman said the joint management arrangement would operate into the foreseeable future. He said there was "no assumption" one of the two managing directors would depart and the stewardship of the organisation be handed to the other. Foster and Kazacos are to report in to Telstra business and government group managing director, David Thodey, who also chairs the board of Kaz Group. Foster is, the spokesperson said, assuming responsibility for sales, marketing and business operations and Kazacos innovation, product management and development and strategic investments. Telstra acquired the Kaz Group in April for AU$333 million.

Thodey said the move "meets the commitment Telstra made when we acquired Kaz to create a new ICT services business of significant scale while also retaining the independence and flexibility that has made the Kaz Group so successful in the past".

Kaz subsidiary companies, including Australian Administration Services and Fundi Software are to continue operating as separately branded entities under their existing management structure within Kaz.