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Telecom Says Won't Lose Money By Not Tendering For CBA Contract

Fuseworks Media
Fuseworks Media

Wellington, July 17 NZPA - Telecom's business Gen-i does not expect to lose money by not tendering for another contract with major client, Australian bank CBA.

Telecom signed a five-year, $A500 million ($NZ638 million) contract in 2000 to provide Commonwealth Bank of Australia with the majority of its telecommunications services, and its current contract expires early next year.

Gen-i, Telecom's information and communications technology (ICT) business, decided not to tender for the new contract, and to focus on smaller trans-Tasman companies.

Gen-i NZ spokeswoman Carmela Salisbury said the new tender would involve more effort and investment to meet CBA's needs.

"It's more profitable to be focusing on our mid-market where we can develop repeatable solutions."

Mid-market was larger than small to medium enterprises, but smaller than the larger corporates which required more individually tailored systems.

"We've been very successful in winning a lot of business in this small- to mid-market, so we're very aggressive and think we'll come out even, we're not expecting any loss," she said.

While the contract ends in February 2009, Gen-i will help bring on board the next company, expected to take 12 to 18 months once CBA awards the contract, Ms Salisbury said.

CBA would continue to be a large client for other services such as contact centres.

"We provide quite a number of other services, so we're hopeful that that type of work we can just keep building on that, and it's more profitable that what we're currently doing."

Gen-i has 3300 corporate, government and business customers.

The decision did not change financial guidance previously provided to the market.

Telecom has previously forecast net profit of $700m-730m for the year ended June, with earnings before interest, tax, depreciation and amortisation to decline 4-6 percent in 2009.

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