The move is part of Telstra's Strategic Review announced in November 2005.
The review process is in its early stages and KAZ is unable to comment for several months.
In a statement, Kaz said its ICT services business is not part of this review, is not for sale and is a key part of Telstra's strategy to deliver comprehensive, end-to-end ICT solutions to Telstra's business and government customers.
KAZ has also divested its interest in Perth-based software development company, Fundi Software Pty. Ltd. in a management buy-out.
Acquired by KAZ in 2000, Fundi's IT services business was integrated into KAZ, leaving the software development business as a separate entity. Fundi Software is the business that KAZ is now divesting.
KAZ CEO Mike Foster said Fundi Software, whilst profitable and a highly respected enterprise systems management business, is no longer core to KAZ's business plan of delivering ICT and IP services that leverage the Telstra network.
"KAZ will continue to maintain good relationships with Fundi and provide ongoing IT support," Foster said.
It is expected the Fundi management buy-out will be a smooth transition for employees, many of whom worked for Fundi, which develops system software for the enterprise environment, before the KAZ acquisition in October 2000.