Telstra gets deeper into the public cloud with boosted Microsoft deal

Australian operator group Telstra has increased its exposure to the public cloud by expanding its partnership with Microsoft.

Touted as one of the biggest deals Microsoft has ever struck with a telco, it aims to combine the best of Microsoft’s cloud services with Telstra’s network reach. What that means in practice is Microsoft Azure will become Telstra’s preferred cloud partner, accelerating its plan to migrate 90 percent of its IT workloads to the public cloud by 2025.

Telstra will also launch an end-to-end Microsoft practice to help enterprise customers make the most of what the two companies have to offer, such as Microsoft’s cloud, edge and productivity solutions and Telstra’s fixed and mobile networks and technology. This builds on the work they did together last year that led to the creation of Telstra’s Branch Offload managed service. Due to launch by the end of this year, it brings together Telstra’s fixed and mobile networks and Microsoft Azure Stack Edge to offer corporate clients the flexible, redundant public cloud environment, but the performance of on-premises cloud.

In addition, Microsoft will become anchor tenant on Telstra’s intercity fibre network. It will also explore the possibility of increasing its capacity on Telstra’s Asia-Pacific subsea cable network, giving it better connectivity across the region.

“As the go-to partner for Microsoft in Australia, this expanded agreement will turbocharge how we deliver compelling, all-digital experiences,” said Telstra CEO Andrew Penn, in a statement.

As is becoming the norm, the expanded partnership also comes with a sprinkling of environmental, social and governance (ESG) initiatives. Under their agreement, the companies will combine the capabilities of Microsoft Cloud for Sustainability with the Telstra Data Hub platform to provide data insights that will help enterprise, government, and small business customers meet their sustainability targets. Microsoft has also agreed to help Telstra meet its own ESG objectives.

“Digital technology is foundational to the resilience and differentiation of every organisation,” said Microsoft CEO Satya Nadella. “Our partnership brings together Telstra’s leadership in network connectivity with the breadth and depth of the Microsoft Cloud to address key challenges, including hybrid work and sustainability, and support Australia’s growth.”

A broad, deep partnership with a hyperscaler like Microsoft puts Telstra in a strong position to capitalise on enterprise public cloud uptake. Earlier this year, Gartner predicted that by 2025, public cloud will account for 51 percent of global enterprise IT spending, up from 41 percent this year. In monetary terms, that translates to $917 billion.

As the Telstra-Microsoft deal highlights, telcos bring the network coverage and capacity to the party – the so-called public cloud on-ramp role – while hyperscalers bring the data centres and apps. Telcos can also leverage their enterprise customer relationships to cast themselves as trusted public cloud partners, which is what Telstra plans to do via its consulting arm, Telstra Purple.

“Beyond our network, one of our biggest differentiators is our 2,000-strong Telstra Purple team of technology experts who partner with businesses to design, deliver and manage solutions across cloud, cybersecurity, software development, data and AI, and workplace technologies,” said Penn. “Our strategic partnership with Microsoft is on a scale not seen before in Australia, and it will be Australian businesses who will benefit at a time when the urgency to digitise and transform their operations has never been greater.”

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