Telstra to slash 8000 jobs in restructuring

Telstra plans to slash 8000 employee and contractor positions as part of a wide-ranging restructuring aimed at simplifying its operations and responding to the tight competition in the market.

The new Telstra2022 strategy will also see the company establish a standalone fixed-line infrastructure division with an eye towards a potential demerger after the nbn rollout concludes.

The strategy has four pillars, with one pillar involving greatly simplifying Telstra’s organisational structure and operating model.

As part of this ambition, Telstra plans to cut around 8000 employees and contractors over the next three years, including one in four executive and middle management roles.

Through this restructuring Telstra plans to reduce between two and four layers of management, and reduce labour costs by around 30%.

The company has also revealed plans to establish Telstra InfraCo, a wholly owned standalone infrastructure business unit, on 1 July.

The unit will oversee Telstra’s fixed infrastructure assets including data centres, domestic fibre, copper, hybrid fibre coaxial and international cables, and will sell services to Telstra, wholesale customers and nbn co.

In addition, the unit will comprise Telstra’s commercial work activities for nbn co and Telstra Wholesale, with a total workforce of around 3000 and expected annual revenues of around $5.5 billion.

Telstra said establishing the unit will allow the company to potentially demerge or invite a strategic investor into the division once the nbn rollout is complete.

A third pillar in the strategy involves reducing the complexity of Telstra’s offerings for customers. Telstra plans to retire all of its more than 1800 consumer and small business plans and replace them with just 20 core plans, and to reduce its enterprise product portfolio by more than half within three years.

As part of the strategy Telstra also plans to create a new Telstra Global Business Services group, monetise assets worth up to $2 billion over the next two years and reduce its core fixed costs by $2.5 billion by FY22.

“The telecommunications sector has never been under more pressure, with the development of the nbn, very significant increased competition and a lot of pressure to [invest in] new technologies,” Telstra CEO Andy Penn said at a press conference.

“Customers will have more choice than ever in a post-nbn world with increasing mobile competition. We are committed to leading the market in a period of transition and positioning ourselves to create a strong platform for growth.”

Communications Workers Union National President Shane Murphy said Telstra’s planned cutbacks represent one of the largest job cuts in Australian corporate history.

“Telstra’s decision to slash 8000 jobs will devastate thousands of Australian families and have a significant impact on Telstra’s ability to deliver for consumers. In an industry which is booming, Telstra has clearly chosen to prioritise short-term profits to keep shareholders happy, instead of investing in the future of Australia’s networks,” he said.

“In particular the CEPU is concerned about plans to hive off Telstra’s network of infrastructure, which seems a first step to selling it off altogether. This is a recipe for reduced services, with Telstra’s highly skilled workforce of employees and contractors replaced by casuals and piece workers.”

Calling the decision “the low-point of 20 years of privatisation”, he urged Telstra to reconsider the plan.

Image credit: ©stock.adobe.com/au/ShiningBlack

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