Telstra has lost up to $90 million on its deal with the Commonwealth to run Centrelink's phone lines, according to insiders, and there is no end to the pain in sight with at least two more years of the agreement left to run.
Insiders have told Fairfax that Telstra lost $30 million a year for the first two years of its $474 million phone hook-up with the giant Department of Human Services, with the losses expected to continue at a similar or greater rate for the foreseeable future.
But another source close to the contract said the internal criticism of the deal was "harsh" indicating the telecoms giant was willing to absorb losses at the front end of the contract period in order cement its hold on the government work.
Telstra has not responded to the claims, with repeated requests to its publicity department for comment going unanswered.
The reported red ink means the losers from the deal are piling up; callers to Centrelink phone lines, who have seen services grow worse since the deal was signed in 2012, taxpayers who have seen little value from the outsourcing and Telstra's army of shareholders who have not been told of the losses.
Long term they see a huge profit by locking in departments to the deal. It will prove very expenseive for them if they wish to leave Telstra in the future.
Telstra knows that departments grow under all governments.