Telstra restructure axes 8,000 jobs

Telstra CEO Andy Penn says the telco is Telstra says it is targeting a further $1 billion in cost cutting by the 2022 financial year

Australia's dominant telecommunications company Telstra Wednesday announced plans to axe 8,000 jobs - a quarter of its workforce - as part of a drastic new strategy to cope with an increasingly competitive industry.

"We are creating a new Telstra that is able to continue to lead the market", said CEO Andy Penn.

The company, which has 32,000 employees, said one in four executive and middle management jobs will be eliminated over the next three years.

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The Penn strategy is in tune with the thinking of those in the market who believed that to arrest Telstra's decline in a post-national broadband network environment Telstra needed to accelerate its cost-reduction programs, create a better demarcation between its infrastructure-heavy past and its mobile and retail future and improve both its service levels and competitiveness. The new strategy has been given the moniker Telstra2022.

"In the future, our workforce will be a smaller, knowledge-based one with a structure and way of working that is agile enough to deal with rapid change". "This means some roles will no longer be required, some will change and there will also be new ones created".

"We have worked hard preparing Telstra for this market dynamic while ensuring we did not act precipitously".

The standalone infrastructure business will be called "Telstra InfraCo" comprising Telstra's fixed network infrastructure including data centres, non-mobiles related domestic fibre, copper, HFC, worldwide subsea cables, exchanges, poles, ducts and pipes.

Under Telstra2022 all Telstra's 1800 consumer and small business plans are going to be "retired, " replaced by 20 core plans sitting on digital platforms.

Reducing 2-4 layers of management across the organisation.

"It does raise the issue of ongoing employment as technology advances and obviously a lot of the technological advance makes many of these positions redundant because they're aiming to reduce the amount of customer service calls, for instance, by two-thirds by 2022", he said. It will include fixed networks, data centres, non-mobile fibre, the HFC network, global sub-sea cables, exchanges, ducts, pipes, NBN-related revenues and relationships and Telstra Wholesale.

This unit will have about 3000 workers and is expected to control assets with a book value of about $11 billion and have annual revenues and EBITDA of about $5.5 billion and $3 billion respectively.

Telstra, Australia's former telecommunications monopoly, is also planning to split its infrastructure operations, which include data centers and broadband cables, into a separate unit and will drastically slim down the number of products it offers customers.

As an infrastructure play InfraCo would be more highly valued by infrastructure investors than by Telstra investors today.

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