Telstra has scooped a $1.1 billion telecommunications services contract with the Defence Department, its largest customer contract in the telco's history.

The six-and-a-half year contract involves transforming Defence's communications technology including better integrating fixed telecommunications with satellite and tactical networks.

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It will also provide a vital link connecting troops, commanders, bases and allies globally through the use of unified communications, video conferencing, tablets and smartphones.

"The agreement represents the largest customer undertaking in Telstra's history and will support military operations at home and abroad," Telstra CEO, David Thodey, said in a statement.

The deal will see 350 new jobs created to help fulfill contract requirements, specifically targeting IT, network and security experts.

Defence's telecommunications networks involve 430 sites across the country and supports 100,000 users in Australia and overseas.

Defence CIO, Dr Peter Lawrence, said the transformation of its network was central to wider strategic reforms throughout the department.

The transformation of the communications network is expected to be completed by mid-2016 and will improve network performance and meet capability requirements to 2023.