Telstra Swings The Axe. More Cuts
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Telstra has swung the axe even deeper into its costs, consolidating more than 100 contracts with 100 vendors, to just three. The new partnerships cover fault repairs, installations, civil works and construction in the access network and over the likely four years will cost Telstra about $2.5 billion. It aims to save about $140 million.

Winners of the new contracts are listed Service Stream, Visionstream and Silcar. Among those missing out is the Transfield group, which is said to have existing contracts worth $120 million with Telstra, due to expire on June 30 next year.

The new agreements are for two years, with two-year options that could be worth in total up to $2.5 billion of work over four years. Telstra describes the saving of as $140 million “over the initial term”.

Service Stream estimates the national contract will bring it alone revenues of more than $300 million a year, more than doubling its current revenues.
The company says the new contract gives the company full national supplier status with the telco; it’s the company’s biggest contract since it went
public in 2004.

“Service Stream will provide installation, maintenance and construction of copper, fibre and broadband networks from the exchange to Telstra’s
customers’ premises,” the company says.

The contract will involve recruitment and training of a significant nationwide workforce of 2500.

Service Stream’s CEO Patrick Flannigan says Service Stream has capacity in its management team and work allocation management systems to support the increased volumes required.

“Work has already commenced on securing additional offices and depots to enable the smooth transition within all regions,” he adds.

Service Stream is listed on the Australian Stock Exchange. It made a net profit of $11.2 million on revenue of $247 million in the year to June 30.