Is Telstra now Australia's biggest reseller?

Telstra today revealed revenue from its Network Applications and Services (NAS) division – the unit encompassing IT services – had reached $821 million, following a 29 percent increase in the first half of 2014.

The division's growth included double-digit gains in cloud, unified communications and particularly managed network services, where revenues jumped 65 percent.

The gains follow a strong performance for Telstra's NAS business in the last financial year, when it grew to $1.5 billion.

The IT services division received special mention from Telstra CEO David Thodey, who said the telco had increased focus and resources on "growth areas" including the NAS division.

"We continued to invest in NAS by building our capabilities and acquiring companies such as North Shore Communications (NSC) and O2 Networks," read today's statement by Thodey.

As well as the O2 Networks acquisition, the telco also bolstered its services arm by buying IT services providers DCA Health and took a stake in FRED IT, which supplies IT to pharmacies.

NSC Group turned over $72.6 million in the 12 months to 30 June 2013, while O2 Networks generated $40 million in the same period.

The surge in Telstra's NAS sales suggest the telco is now the largest IT solutions provider in Australia – potentially by some margin.

According to the most recent available results for Dimension Data, the company generated revenues of US$807.6 million ($902.4 million) across Australia & New Zealand for the 2012 year.

Meanwhile, the biggest Australian-owned reseller, Data#3, saw 2012-13 revenues of $771 million and is expecting less than stellar results for the first half of this financial year.

Cost of growth

The gains also came with an increase in operating expenses, which increased by $155 million. This was partly driven by upfront costs in support of the implementation of Telstra’s largest contract – a $1.1 billion deal with the Department of Defence for its terrestrial communications network.

Telstra also incurred redundancy expenses of $126 million – a 26 percent increase on the previous corresponding six months - due its restructuring efforts, which will see 1100 operations jobs cut by June this year.

Telstra’s recent $650 million investment into its mobile infrastructure has seen it add 739,000 retail mobile customers to its books in the six months to December 31. Its customer base now sits at 15.8 million domestic retail mobile customers, including 4.1 million mobile 4G devices, compared to 1.5 million in the first half of fiscal 2013.

Telstra’s total revenue for the first half of fiscal 2014 came in 3.5 percent higher than last year at $12.6 billion. It also increased net profit by 9.7 percent to $1.7 billion.