Astute wins big TelstraClear contract

By PETER GRIFFIN telecoms writer

The latest wave of consolidation in the telecoms contracting market has begun with TelstraClear's move to one contractor, Christchurch company Astute, for all its field operations.

Astute, a division of listed telecoms services company Cabletalk, picks up a contract that will be worth between $20 million and $30 million a year.

Though Astute already had about 40 per cent of TelstraClear's field contracting business, the move to one supplier effectively puts an end to the contracts of 80 smaller companies who supply network maintenance services to TelstraClear.

The Astute deal will save TelstraClear as much as $12 million, savings gained through shifting from being charged an hourly rate to defined job pricing as well as a reduction in administration.

TelstraClear's chief of customer operations, Connell Graham, said many of the 80 contractors were expected to find work with Astute.

"Astute will have to [use them]. While these big companies can cover the main area, they always have to go to other companies for some of the work."

Telecom also has said it will cut down on the number of its field contractors, which at present include Alstom, Cabletalk, GDC Communications and Downer Connect.

Those companies compete fiercely for the contracts to deliver telecoms maintenance services in 34 "patches" around the country. The contracts are usually high-turnover but low-margin, which has forced several patch contractors to diversify into IT services.

GDC is gradually replacing contracting revenue with business from its iVASP IT division.

Telecom will decide on its consolidation at the end of the year.

For those companies, being dropped as a contractor means a potential loss of revenue of tens of millions of dollars.