Telstra boosts cloud services

Telco drives into unified communications services

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published August 22, 2013 4:12 pm AEST

Telstra Corporation (ASX:TLS) is reported to be buying NSC Group in a deal that could be worth up to $100 million.

NSC Group provides call centre and technology support services to 600 primarily small to medium enterprises (SMEs) in the Asia-Pacific region, including AGL Energy and Macquarie University.

The acquisition will make Telstra Australia's leading provider of unified communications products such as video conferencing, instant messaging and telephony. David Burns, head of Telstra's Netowrk Applications and Storage (NAS) has told the Australian Financial Review (AFR), "It's an important part to our growth strategy, in particular around our unified communications and our contact centre strategy."

NSC Group executive chairman Craig Nell, said he was selling the business after 24 years, so that NSC could offer its services in the cloud, something Telstra has been building for a number of years. Mr Nell told the AFR, "Telstra was probably providing half of the available technologies for contact centres and unified communications into the marketplace and we were doing the other half," he said. "It's in a sense a perfect storm to be able to provide a full offering to organisations."

Telstra's NAS division could be the main driver of the telco's growth within a few years, after posting a 17.7% jump in revenues to $1.5 billion in the 2013 financial year. With data transmission and consumption expected to grow exponentially, cloud services are likely to be in big demand.

Apart from Telstra, other companies looking to take advantage of the surge in data, is NextDC Ltd (ASX:NXT) with its data centres, Vocus Communications (ASX:VOC) and Amcom Telecommunications (ASX:AMM), both with data centres and super-fast fibreoptic networks.

Foolish takeaway

With its dominant mobile business unlikely to generate massive growth in the years ahead, Telstra will be looking to its other divisions to drive strong growth. Network Applications and Services could be in the driver's seat.

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Motley Fool writer/analyst Mike King owns shares in Telstra, Vocus and Amcom.

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