Today, Telstra and Microsoft announced an expansion of their strategic partnership, marking a significant milestone in the evolution of AI innovation in Australia. By combining Microsoft’s leading AI technology and Telstra’s leading Intercity Fibre Network project, the two companies will help accelerate digital transformation and develop Australia’s AI ecosystem.

Microsoft has selected Telstra as a strategic partner to extend its AI infrastructure in Australia to serve the growing demand for AI. As a foundational partner on Telstra’s new ultra-fast Intercity Fibre Network, Microsoft has now signed contracts for the first routes and has engaged Telstra InfraCo as part of its strategy to deliver enhanced connectivity solutions within Australia and to power more AI capabilities for its customers.

Telstra is also investing in 21,000 Copilot for Microsoft 365 licences to help its employees adapt and thrive in an AI-fuelled future, making it the largest deployment of the generative AI service in Australia and one of the largest of any telecommunications company globally.

Telstra CEO Vicki Brady said the symbiotic partnership between Telstra and Microsoft underscored the critical role of robust connectivity infrastructure in fuelling AI advancements.

“As we move into this new era of AI, connectivity has never been more fundamental. There’s so much to be excited about when it comes to AI – including generative AI tools like Copilot – but none of it works without the foundational layer of secure, reliable connectivity. Microsoft’s leadership in AI is driving the demand for capacity in our infrastructure, and Telstra is building that connectivity to meet this demand. Together we’re building the AI ecosystem of Australia."

Judson Althoff, Executive Vice President and Chief Commercial Officer at Microsoft said: “Our strategic partnership with Telstra reflects Microsoft’s commitment to empowering organisations’ AI transformation responsibly and securely.

By extending our AI infrastructure, we can continue supporting our customers and partners as they unlock new opportunities and realise meaningful business value with AI.

Together, we are enabling AI transformation across Australia that enriches employee experiences, reinvents customer engagement, reshapes business processes, and bends the curve on innovation.”

Ensuring the right level of connectivity for the AI era

As AI technologies generate and process large amounts of data, they require connectivity that is fast, reliable, secure and scalable. Telstra’s investment in its Intercity Fibre Network will provide this connectivity, extending Microsoft’s AI infrastructure so that organisations, industries and Australia as a whole can continue to leverage the transformative benefits of AI.

“Our intercity fibre network routes connect Australia to the world, seamlessly transitioning terrestrial fibre to our extensive international subsea fibre network. This partnership, which involves building high-capacity intercity fibre routes for Microsoft, further enables Microsoft to boost its capacity and achieve end-to-end connectivity across key telecommunications routes in Australia and across the Asia-Pacific region,” said Brady. "With around 1,800 kilometres of fibre already laid across the country, Telstra’s Intercity Fibre Network is undeniably about the future and will drive growth, connectivity and digital prosperity. It will move the nation’s digital capabilities from the gigabit era to the terabit era – which will be essential for AI, quantum and new data centre gigaplexes."

Taking the next step in Telstra’s AI-fuelled transformation

Telstra is proposing a phased roll out of Copilot to its regular users of Microsoft 365 apps, after consulting with employees and unions. The large-scale adoption follows a successful trial of 300 early adopters, who reported using Copilot to summarise meetings, emails and chat threads, and generate first drafts of content. According to survey results, most Telstra users reported saving between 1 – 2 hours per week, with 90 per cent agreeing that Copilot improved their experience at work.

The Copilot roll out is the next step in Telstra’s ambition to be an AI-fuelled company and follows the deployment of AI tools to help frontline employees better serve customers – like AskTelstra and One Sentence Summary – and a company-wide Data & AI Academy to train employees to use AI confidently and responsibly.

“We’re dedicated to equipping our people with the best AI technology and upskilling them to thrive in the workforce of the future,” said Brady. “Giving our team access to Copilot not only gives them the space and time to spend on more meaningful tasks, but also fosters a culture of continuous learning, improvement and innovation as we drive digital and AI transformation through our business.”

The expanded partnership builds on the strategic five-year agreement that Telstra and Microsoft announced in July 2022 to support Australia’s digital growth.