Telecom is entering into final negotiations with the Commonwealth Bank of Australia for a contract that is worth A$500 million.
Telecom will provide telecommunications services to the CBA over the next five years. The CBA will forecast its service volumes annually and Telecom will provide the infrastructure necessary to meet the services needed.
The CBA says that the contract will deliver new efficiencies to the bank, including a full range of integrated data, voice and video services over the Internet protocol network which will reinforce the CBA's online leadership position.
Using Telecom as a partner will mean that the bank will only pay for what it uses without having to meet the fixed costs associated with installation and maintenance of infrastructure.
Market speculation on the contract had yesterday centred around AAPT, of which Telecom has the controlling interest in. In an announcement to the Australian Stock Exchange AAPT says that "AAPT will be a subcontractor to Telecom New Zealand and provide the IP network and support infrastructure".
The contract may rise in value as Colonial, which recently merged with the CBA, adds its telecom services to the equation.
Telecom reacted well to the news, closing the day up 18c to $7.63.