• Telstra selects Microsoft as its preferred public cloud partner
• A new long-term agreement between the companies is seen as the largest such tie-up in Australia in terms of scale  
• The collaboration will unlock various benefits for the telco, especially around efficiencies and new service creation
• Hyperscalers are playing an increasingly important role in telcos’ modernisation agendas

Telstra has selected Microsoft Azure as its preferred public cloud partner as part of a broader partnership expansion and to support the advance and execution of its T25 strategy.

The enhanced partnership will run for five years and is seen as among the largest partnerships Microsoft has established with a telco anywhere in the world and “on a scale not seen before in Australia”, according to Telstra’s outgoing CEO, Andrew Penn.

The move is an important part of Telstra’s own transformation, which will involve migrating the vast majority of its workloads onto its partner’s public cloud platform. And according to the partners, it will enable them to support enterprises in Australia with their digitalisation plans. 

The silver lining for Telstra

The new collaboration will help the Australian telco to migrate around 90% of its applications to public cloud infrastructure by 2025. In this endeavour, Microsoft’s service Azure will act as Telstra’s preferred cloud partner, marking an important telco win for Azure as Google Cloud and Amazon Web Services (AWS) have been grabbing the telco deal limelight of late. 

But the relationship between Telstra and Azure is not exclusive: AWS is the telco’s collaborator for developing multi-access edge computing (MEC) solutions for Australian customers, while it is working with Google to create a 5G-powered augmented reality (AR) stadium experience that is delivered via the Google Cloud platform.

Microsoft has pledged to help Telstra scale in alignment with its T25 strategy, while contributing to the operator’s goal to “maximise value and efficiencies” from the cloud migration, as well as bring about faster delivery of products and services.

In fact, the pair will join forces to provide a new suite of digital offerings for Telstra’s business customers. These will include “new industry-based solutions that will help transform the way businesses look at hybrid working and cloud migration” using Microsoft’s cloud offering Azure, office apps suite 365 and collaboration platform Teams.

“Initially focusing on manufacturing, retail, agriculture, utilities and finance, these new digital offerings will be delivered by a dedicated end-to-end Microsoft practice” within the operator’s managed services business, Telstra Purple, the two companies noted in a joint statement. This new practice is said to unlock “maximum value” for the joint customers of Telstra and Microsoft as they would be able to accelerate their digital transformation efforts through a cocktail of Microsoft’s cloud, edge and work solutions, mixed with Telstra’s “network leadership” and technology experts.

The two companies will also keep working on products that “reimagine familiar experiences” and create new offerings by merging the network and the cloud. As an example, they pointed to Branch Offload, which is purported to be the first 5G-enabled edge computing solution for enterprises in Australia. The new solutions are targeted at enterprise, government, and small- and medium-sized business customers.

Another benefit for Telstra is the combination of Microsoft Cloud for Sustainability and the Telstra Data Hub platform, which enables the telco to deliver a service to its customers that offers data insights into sustainability performance. In fact, the operator will use Microsoft’s solution for its own sustainability progress tracking as well.

What’s in it for Microsoft?

For Microsoft, this agreement is deemed vital to boosting its connectivity and growth in Australia as the company will act as “an anchor tenant” on Telstra’s ultra-fast intercity fibre network.

While the Australian telco will be Microsoft’s largest supplier of its network capacity requirements on terrestrial fibre in the country, the US hyperscaler will also explore the option to increase its capacity on Telstra’s Asia-Pacific subsea cable network.

“Through these investments, Microsoft will be able to achieve unparalleled end-to-end connectivity across key telecommunications routes” in the region, the company argued. It claimed enhanced connectivity is particularly needed with the increase in remote working, online education, entertainment and gaming.

 “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”, commented Microsoft’s chairman and CEO, Satya Nadella.

In September 2020, the two companies committed to working together to create “innovative and sustainable products”, which gave birth to artificial intelligence (AI)-powered video analytics offerings for commercial customers. Telstra has also been using Microsoft Advertising for its search engine marketing (SEM) strategy and budget.

Microsoft has been striving to play a bigger role in the telecom sector lately: As part of those efforts, it recently opened a facility just outside London in an effort to engage further with UK operators – see Microsoft Azure targets UK telcos with new Enfield facility.

In general, hyperscale deals are seen as vital if telcos are to scale their operations and deliver enterprise offerings that address market needs. As Waseem Haider, principal analyst at Strategy Analytics, recently put it, telcos need to form partnerships with the hyperscalers if they want to develop affordable and scalable end-to-end offerings that can meet the evolving needs of enterprise users – see Telcos court big-name partners to capitalise on enterprise opportunities.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV