Telstra's KAZ still not for sale

Telstra subsidiary KAZ today maintained its core ICT services business was not on the market despite the fact it was investigating options for its superannuation assets. The news comes after KAZ announced on Monday it had divested its interest in Perth-based software development company Fundi Software, fuelling long-standing rumours Telstra was looking to sell its troubled ICT services subsidiary.

Telstra subsidiary KAZ today maintained its core ICT services business was not on the market despite the fact it was investigating options for its superannuation assets.

The news comes after KAZ announced on Monday it had divested its interest in Perth-based software development company Fundi Software, fuelling long-standing rumours Telstra was looking to sell its troubled ICT services subsidiary.

In a statement issued today, KAZ confirmed it was considering options for its superannuation administration business in a review expected to be completed at the end of July this year, but maintained its core ICT services business was not on the market.

"KAZ's ICT services business is not part of this review, is not for sale and is a key part of Telstra's strategy to deliver comprehensive end-to-end ICT solutions to Telstra's business and government customers," the statement said.

Rumours of a sale have plagued KAZ since its acquisition by Telstra in April 2004 for an estimated AU$333 million.

In December, well-placed sources claimed IBM Global Services and Telstra were in the final stages of a deal which would have seen IBM pick up the lion's share of KAZ for around AU$320 million.

The move would have followed an extensive period of soul-searching for KAZ employees, many of whom are understood to have jumped ship to rival firms in the closing months of 2005.

Despite the rumours of a sale, KAZ has continued to win large clients, the most significant of which is a November support deal with the Department of Defence worth AU$200 million over five years.

Financial services group ING also extended a contract with KAZ in November to the value of AU$45 million over five years. Other high-profile customers include the National Australia Bank, AMP, Qantas and Woolworths.

However, rival services companies have also recently made inroads into Telstra's own IT internals.

In April it was revealed Telstra had signed a contract with IBM to manage all of the telco's IT systems until 2012, in a deal reportedly worth AU$1 billion over six years.

In a statement issued Monday on the Fundi sale, KAZ chief executive Mike Foster said his company's business plan was "delivering ICT and IP services that leverage the Telstra Network."

KAZ is understood to employ approximately 4,000 people across Australia and South East Asia.