Telstra: We'll keep Kaz

Sol Trujillo - CEO Telstra

Telstra has declared its intention to retain IT services subsidiary, Kaz.

For several months speculation has mounted that Telstra was in discussions with a number of parties, including Fujitsu, HP and IBM, to offload Kaz. Industry sources have suggested a potential deal with Fujitsu did not come to fruition after both sides were unable to agree on a price or terms and conditions.

Fujitsu managing director, Rod Vawdrey, has repeatedly declined to comment to media on the rumours.

During its financial briefing on Wednesday, Telstra CEO, Sol Trujillo, said it had been holding conversations on a Kaz sale but it had now decided to keep Kaz as a key part of its enterprise offering.

According to Telstra’s full-year results to June 30, its IT services business including Kaz experienced a 15.8 per cent fall in revenue from $501 million to $422 million. The telco attributed about $40 million of this to the sale of several Kaz business units including Australian Administrative Services, Kaz Software Solutions and Invizage.

Telstra also pointed out the loss of one managed desktop services contract in the final quarter of the fiscal year, wiped $13 million in revenue off its books. Last month, Aussie Home loans replace incumbent IT provider, with Datacom.

Independent telco analyst, Paul Budde, wasn’t convinced that Telstra would keep Kaz long-term and said there continued to be a vast differences between running a telecoms operator and an IT services provider.

“Today they’re keeping it; tomorrow it’ll be up for sale again,” he said. “It’s been a yo-yo over the last couple of years. The heart isn’t in it – what’s clear is Kaz isn’t the same company it was fours years ago when Telstra bought it.

“It could be that Telstra hasn’t found a buyer for it at the right price so has decided to hold onto Kaz for now. It’s hard to tell from this what Telstra really wants from Kaz – there’s no committed strategy other than milking it.

“I wouldn’t be surprised if it goes up for sale again.”

Overall, Telstra reported a 13.3 per cent increase in net profit to $3.7 billion and pre-tax profits of $6.2 billion. Its total revenues reached $24.8 billion.

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