The Telstra Corporation Ltd (ASX: TLS) share price in is focus after it renewed its deal with the Australian Department of Defence.
At the end of October Telstra announced that it will acquire Digicel Pacific in a partnership with the Australian Government. The purchase is expected to be completed in the next three to six months. This could still be creating a ripple effect for the Telstra share price.
Telstra’s deal with Australian Department of Defence
The company announced that it has renewed a ‘significant’ contract with the Australian Department of Defence. Telstra said that it delivers “critical network and telecommunications services” for the Department.
The contract is for a period of five years and is worth over $1 billion. It includes the option for the Department of Defence to extend for up to a further three years.
Telstra said that it is the largest ever customer contract of its kind signed by Telstra Enterprise.
What will Telstra provide?
Some of the details that the agreement covers are significantly increased wireless coverage through a dedicated ‘Wi-Fi 6’ rollout and a 5G mobile network for Defence personnel.
Telstra said that it will continue to provide the Department with “leading-edge technology and telco solutions”.
The company expects that the agreement will create opportunities for local industry, noting in particular small and medium enterprises and Indigenous companies.
Telstra said that it works with more than 30 Australian suppliers that enable it to deliver around $50 million of technology and services annually for Defence.
Telstra CEO Andrew Penn said:
“Telstra is committed to working with the Australian Government to ensure a thriving and safe digital economy and society, including ensuring the Department of Defence and Australian Defence Force have access to world-leading technology.
“After successfully delivering an enormous program of work under our previous contract with the Department, we are excited by the opportunity to take our collaboration even further.”
Summary thoughts on the Telstra share price
Telstra seems to have turned a corner and is predicting underlying profit growth. It has also made useful acquisitions like Digicel Pacific and MedicalDirector in the last few months.
The Telstra share price is up almost 1% today and over the past year the Telstra share price has increased by over 44%, which is quite impressive given the size of the company.
Telstra isn’t something I’m in a hurry to buy, there are plenty of ASX dividend shares I would go for first. However when considering blue chips, Telstra is a reasonable choice.
