Own Telstra shares? Here’s the latest on the telco’s new Microsoft deal

a woman in business wear looks at her phone against the window of a high rise space with a city landscape view of tall buildings outside.a woman in business wear looks at her phone against the window of a high rise space with a city landscape view of tall buildings outside.

The Telstra Corp Ltd (ASX: TLS) share price is edging lower today.

This comes after the company expanded its partnership with US tech giant Microsoft Corporation (NASDAQ: MSFT).

At the time of writing, the telco provider’s shares are down 0.51% to $3.92 each in early trading on Wednesday.

Let’s take a look below at the deal.

What was announced?

In a media release, Microsoft advised it has signed a five-year strategic agreement with Telstra to drive Australia’s digital growth.

Under the partnership, Microsoft’s cloud technology will be integrated into Telstra’s new intercity fibre network. The aim is to have 90% of its applications on public cloud infrastructure by 2025, which includes Microsoft Azure as a preferred cloud partner.

Furthermore, Microsoft will explore boosting its capacity on Telstra’s Asia-Pacific subsea cable network. This will help Microsoft achieve end-to-end connectivity across key telecommunications routes in Australia and across the Asia-Pacific region.

Connectivity in today’s world has become vital, particularly since COVID-19.

Businesses are more decentralised with remote working while user demand for online education, entertainment, and online gaming has accelerated.

Combining Telstra’s network with Microsoft’s cloud capabilities will provide the best possible experiences for customers, the companies say. Overall, more bandwidth and reduced latency will ensure a smoother flow of connectivity on the cloud.

In return, using Microsoft technology like Azure, Microsoft 365, and Microsoft Teams, Telstra will promote hybrid working and cloud migration.

These industry-based solutions will be initially focused on the manufacturing, retail, agriculture, utilities, and finance sectors. Telstra’s managed services and technology consulting business Telstra Purple will be dedicated to delivering this service to customers.

Management commentary

Telstra CEO Andrew Penn noted the deal with Microsoft is aligned to the company’s T25 growth strategy. He said:

As the go-to partner for Microsoft in Australia, this expanded agreement will turbocharge how we deliver compelling, all-digital experiences.

The pervasiveness of technology in businesses today and its ability to transform their operations, improve productivity, reduce their environmental impact and meet evolving customer needs means there’s no one-size-fits all solution.

…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.

Telstra share price summary

Since the beginning of the year, the Telstra share price has shed 5.5%.

Its shares touched a multi-year high of $4.31 on 18 January before dropping in the following months.

Telstra commands a market capitalisation of around $45.64 billion, making it the 11th largest company on the ASX.

The post Own Telstra shares? Here’s the latest on the telco’s new Microsoft deal appeared first on The Motley Fool Australia.

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More reading

Motley Fool contributor Aaron Teboneras has positions in Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Microsoft. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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