DFAT win affirms Telstra's dominance of Canberra market

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DFAT win affirms Telstra's dominance of Canberra market

Pacnet acquisition delivers a leg-up into $243m deal.

Telstra has picked up one of the last major telecommunications outsourcing contracts in the federal government it didn't already hold.

Earlier this month it sealed a $243 million deal at the Department of Foreign Affairs that will see it take over support of the diplomat’s WAN infrastructure for the next ten years.

A spokesman for DFAT told iTnews Telstra won the work following a “competitive tender process”.

However, the telco's prospects of winning the deal were likely buoyed by its acquisition of the incumbent contract holder, Pacnet, in late 2014.

DFAT signed its most recent eight-year WAN deal with Pacnet in 2008 for $77 million. In subsequent years the value of the contract grew to $136 million.

The new deal is worth more than three times the original Pacnet contract.

DFAT said the new Telstra contract will cover “expanded telecommunications network capacity and more stable and reliable infrastructure to support the evolving needs of the department and government".

“The department’s ICT network relies on WAN services to connect over 160 sites in Australia and overseas on a 24/7 basis,” a spokesman said.

The leg-up into DFAT will be a silver lining on what has not always been a happy purchase for Telstra.

In April 2015, the telco was left to pick up the pieces of a security breach at Pacnet that took place before the takeover was complete.

The AFR subsequently reported Telstra was considering suing its investment consultants over their failure to alert it to the breach during due diligence.

Telstra took over up a good portion of the Canberra market when it signed outsourcing bundles with the Department of Human Services in 2012 and Department of Defence in 2013.

It also holds major deals with the Department of Health and the Department of Immigration.

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