Telecom has entered into a conditional agreement to buy New Zealand owned IT infrastructure and data centre company Revera.
The telecommunications company would pay $96.5 million for the company, funded by cash and existing borrowing facilities.
Revera employs 140 staff at five centres in Auckland, Hamilton, Wellington and Christchurch.
Telecom says the deal will improve its data centre and cloud capabilities to fit with the changing demands of customers.
The head of Telecom's Gen-i arm, Tim Miles, says customers want computing power and storage in a flexible way, which cloud computing provides.