Telecom and Alcatel have signed the country's largest "partnering" deal, although neither company has said how much the deal is worth.
Telecom currently spends around $300 million a year on capital expenditure and this deal is likely to take up the vast majority of that in the years to come.
Alcatel will become Telecom's "primary supplier" of equipment for Telecom's next generation IP network.
EDS will manage the integration of the Alcatel-provided system with Telecom's existing network infrastructure.
Telecom refers to the deal as a 'partnering' one rather than outsourcing.
"In this model we will use each other’s skills to do what neither of us would be able to do by ourselves," says Telecom general manager for network investment, Rhoda Holmes.
Part of Alcatel's brief will be to introduce "significant operational savings" by some "tens of millions of dollars" as the IP network is rolled out.
As reported in IDGNet in November (Alcatel-Telecom deal not signed), Telecom chose Alcatel as its strategic partner over its existing supplier NEC.
Telecom has signalled its intention to commit to more of these strategic partnerships - it has already signed on with EDS to provide for its IT needs and Ericsson for its existing cellular network. This deal, however, could well dwarf even the EDS agreement which was at the time the largest of its kind in New Zealand. Signed in July 1999, Telecom outsourced its entire IT structure to EDS and Microsoft for $1.5 billion over 10 years. The deal was so large that Telecom took a 10% stake in EDS New Zealand as part of the agreement.