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Telstra boosts cloud services

Telstra Corporation (ASX:TLS) is reported to be buying NSC Group in a deal that could be worth up to $100 million.

NSC Group provides call centre and technology support services to 600 primarily small to medium enterprises (SMEs) in the Asia-Pacific region, including AGL Energy and Macquarie University.

The acquisition will make Telstra Australia’s leading provider of unified communications products such as video conferencing, instant messaging and telephony. David Burns, head of Telstra’s Netowrk Applications and Storage (NAS) has told the Australian Financial Review (AFR), “It’s an important part to our growth strategy, in particular around our unified communications and our contact centre strategy.”

NSC Group executive chairman Craig Nell, said he was selling the business after 24 years, so that NSC could offer its services in the cloud, something Telstra has been building for a number of years. Mr Nell told the AFR, “Telstra was probably providing half of the available technologies for contact centres and unified communications into the marketplace and we were doing the other half,” he said. “It’s in a sense a perfect storm to be able to provide a full offering to organisations.”

Telstra’s NAS division could be the main driver of the telco’s growth within a few years, after posting a 17.7% jump in revenues to $1.5 billion in the 2013 financial year. With data transmission and consumption expected to grow exponentially, cloud services are likely to be in big demand.

Apart from Telstra, other companies looking to take advantage of the surge in data, is NextDC Ltd (ASX:NXT) with its data centres, Vocus Communications (ASX:VOC) and Amcom Telecommunications (ASX:AMM), both with data centres and super-fast fibreoptic networks.

Foolish takeaway

With its dominant mobile business unlikely to generate massive growth in the years ahead, Telstra will be looking to its other divisions to drive strong growth. Network Applications and Services could be in the driver’s seat.

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Motley Fool writer/analyst Mike King owns shares in Telstra, Vocus and Amcom.

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