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The contract extension is expected to be worth £640m in revenue to BT over the three-years to 2015. The funding comes from an £810 million fund allocated by the MOD for fixed telecommunications services and other purposes.

Under the terms of the extended contract, the MOD will benefit from improved ability to access and share secure information, while still meeting stringent security requirements.

As part of the extension of the current DFTS Agreement from 2012 to 2015 a transformation programme will begin immediately. BT will manage a number of implementation projects including a major upgrade to the network over which the service is provided.

The DFTS Agreement, signed in July 1997, began by transforming the 19 separate telecommunication networks, serving the Royal Navy, the British Army, The Royal Air Force, and the MOD itself, into a single multi-service platform.

The agreement has continued to deliver savings and new capabilities since its inception and was re-signed last in 2005. It has already saved MOD in the region of £700m. DFTS now reaches over 2,000 sites, interconnecting more than 230,000 users across the UK, Germany, and Cyprus. It carries 750,000 calls every single day, and manages the transfer of 43 million emails a year to and from its dedicated network to users outside without compromising security.