AUST Business today (extract): MICROSOFT AGREEMENT A FITTING...

AUST Business today (extract):
MICROSOFT AGREEMENT A FITTING FAREWELL FOR PENN

TICKY FULLERTON
Monday’s five-year commercial agreement inked between Telstra and Microsoft is a big deal and not just because of the two gorillas involved.
The deal has implications for how the new rivers of gold are carved up in Australia – the revenue from digital goods and services from businesses, and from government enterprises. Telstra and Microsoft fully intend the tie up to deliver a bigger market share for both.
It also sends a message on increased digital security in the Pacific region less than a year after the creation of AUKUS.
And, even though the details are unknown, the agreement will have crystallised the sharing of the huge dollar upside between Telstra and Microsoft as the reach of their joint capabilities has begun to overlap.
This third factor is quite an achievement. Just how well Telstra CEO Andy Penn has cut the deal will not become clear until well after he steps down in September but he has long been savvy to the issue.
The Australian spoke to both Penn in Sydney and the man driving the deal for Microsoft, president of industry solutions Omar Abbosh, from Seattle.
Abbosh was brought on board two years ago by Microsoft chair Satya Nadella after a 30-year career at Accenture where he rose to be global CEO of communications, media and technology.
“You have companies of our respective scale, each investing billions of dollars – in Andy’s case the capital networks and in our case the R&D, the data centres and the software,” says Omar Abbosh. “It’s not often that we trumpet a deal like this one unless it’s material to our businesses, and this one is.”
The deal builds on a multi-year relationship between the firms and a 2020 memorandum of understanding that put Microsoft in as Telstra’s preferred cloud provider.
This time it is an agreement, not an MOU. And for Penn it delivers a prized anchor tenant on the new intercapital superfast fibre project he is building.
Penn will not share forecasts on increased revenue. He will say the investments involved are “very, very material”, including the $1.4bn to $1.6bn made in the new intercapital rollout and another project with Viasat.
Microsoft will help Telstra in shifting 90 per cent of its workload into the cloud, all part of Penn’s T25 strategy.
The deal is about digitising Telstra but also digitising the economy as the hybrid working world takes shape.
In turn Abbosh says Telstra will help Microsoft scale its capabilities, from Azure Cloud services to Teams and Microsoft 360 into small and medium-sized businesses.
“As the world looks forward into the next period of turbulence and uncertainty, software and digitisation remains one of very few forces of deflation where they can bring down costs,” says Abbosh.
Microsoft is banking on Telstra’s high speed, low latency infrastructure and combined technology services to outplay its big rivals like AWS and Google.
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