Telstra IT services overtake wholesale

Telstra's IT services business has had another huge year off the back of acquisitions and its growing cloud business.

The network applications and services (NAS) unit raked in $2.7 billion for the 2016 financial year ending 31 June 2016, an increase of $300 million, or 14.3 percent. To put that in perspective, the NAS business now earns more for Telstra than its wholesale business, which made $2.6 billion this year.

The results got a huge boost from Telstra's acquisition of Pacnet, the Asian cable operator and telecommunications provider Pacnet acquired for $857 million in 2014. Telstra counted Pacnet's NAS revenue as part of its own for the first time, which made $73 million.

Cloud was the big winner out of NAS business units, growing 35 percent to $386 million. Telstra again singled out Pacnet for the strong growth, as well as growth in public cloud solutions.

Telstra also acquired Melbourne Microsoft partner Kloud this year for $40 million, whose revenue was not included individually.

Telstra's other NAS segments all grew, including industry solutions which grew by 19 percent to $757 million off the back of commercial work for NBN.

Pacnet also contributed to Telstra's interntional global enterprise and services business, which grew 55.5 percent to $1.7 billion, compared with just 1.1 percent growth for the domestic enterprise services business to $4.6 billion.

Overall, Telstra's entire revenue was up by $400 million to reach $25.8 billion for the year. Net profit was up 36 percent to $5.8 billion and earnings were down by just 0.6 percent to $10.5 billion.

Despite five highly publicised major outages this year, Telstra's retail mobile customer base added 560,000 new users to reach 17.2 million, while retail fixed-line customers grew by 235,000 to reach 3.4 million.

During the results presentation, chief executive Andrew Penn announced the company would invest $3 billion to overhaul its network, including retiring its legacy systems to make way for 5G services.

Telstra's shares have fallen by approximately 75 cents since the same time last year to trade at $5.56 at the time of writing.