Teams collaboration sessions will be smoother and Azure cloud applications will run faster, Microsoft has promised as the ink dried on a five-year agreement with Telstra that marks the latest stage in cloud providers’ Australian land grab.

Designed to “support Australia’s digital growth”, the five-year strategic agreement links the two companies as favoured partners – with Microsoft becoming an “anchor tenant” on Telstra’s expanding national and undersea fibre networks.

Direct access to those networks will, Microsoft explained, help it provide the “best possible experiences” for gamers, users of online collaboration tools, and the many businesses modernising their systems on Azure Cloud.

Telstra will be one of them, having now committed to favour Azure as it works to move 90 per cent of its production systems to the cloud by 2025 – a core goal of the T25 transformation strategy it launched last year to overhaul its operations with customer service at its core.

It will help customers do the same by building a dedicated “end-to-end” Microsoft practice within its Telstra Purple consulting arm – providing an army of specialists to build Microsoft-based business applications around Telstra’s multi-cloud strategy.

Telstra will also work with Microsoft on environment, social and governance (ESG) projects, tapping services like Microsoft Cloud for Sustainability in pursuit of increasingly important sustainability goals.

Specifics of the deal will be announced later, the companies said, but the deal marks the consummation of a long-standing partnership that has driven work in digital twins – as well as enabling new services like Xbox All Access, Telstra Calling for Microsoft Office 365 unified communications, and the Telstra Data Hub to facilitate secure data management.

The new deal takes the relationship to a whole new level by making Telstra the “go-to partner for Microsoft in Australia”, outgoing Telstra CEO Andy Penn said, promising the two companies would collaborate “on a scale not seen before in Australia”.

“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,” he said.

“It will be Australian businesses who will benefit at a time when the urgency to digitise and transform their operations has never been greater.”

Choosing sides in the cloud battles

Locking in Australia’s largest infrastructure and consulting provider is a coup for Microsoft, which in September 2020 launched a global campaign, called Azure for Operators, to entrench Azure with the world’s dominant telecommunications providers.

That effort has fostered relationships with the likes of AT&T and UAE carrier e&, and Microsoft recently signed on with Spanish telecommunications giant Telefónica to help it harness Azure AI and other technologies for its own digital transformation.

Yet Microsoft isn’t cozying up to Telstra just to sell AI: recent years have seen cloud operators working to secure large-scale deals with banner Australian customers, with Microsoft rival Amazon Web Services (AWS) proving particularly successful.

With a new Melbourne data centre due for launch soon and plans in place for most Australian CBDs, AWS has been expanding aggressively across Australia.

The dominant cloud operator partners with the likes of data-centre stalwart NEXTGEN and integrators PwC and Accenture, and recently raised concerns about over-centralisation after signing large-scale deals including a whole-of-government arrangement with the Digital Transformation Agency (DTA) – which was recently renewed through 2025 at a cost of $174 million – and a similar contract with the Victorian Government.

As the breakneck pace of digital transformation continues, the Microsoft-Telstra partnership will help their customers bring targeted collaboration, remote-work, ESG, Internet of Things (IoT), and other solutions to market.

Telstra is already promising that its deal with Microsoft will help it target manufacturing, retail, agriculture, utility and finance interests with what it calls a “new industry-based solution that will help transform the way businesses look at hybrid working and cloud migration.”