Telstra cuts workforce amid market pressures

Australia’s incumbent telco will cull 1,400 employees in the next six months, with the bulk of the job losses in New South Wales and Victoria

Australia’s biggest telco, Telstra, is trimming its workforce as it faces cost pressures from the roll-out of the National Broadband Network (NBN) and aggressive rivals, according to the company’s CEO, Andy Penn.

Telstra announced last week that it would cull about 1,400 employees within six months, with the bulk of the job losses in Australia’s two largest states.

About 90% of the cuts will be in New South Wales and Victoria. Jobs would go from most of the telco’s constituent parts, including operations, retail, government, enterprise, and media and marketing.

Telstra will take a hit of between A$2bn (US$1.5bn) and A$3bn to its earnings as the access fee it pays for use of the NBN bites harder. The telco will also spend A$3bn over three years to upgrade its networks, especially its mobile network, in a move announced in 2016.

The impact of the NBN – expected to be ready by 2020 – to Telstra’s bottom line has been a long time coming and will have come as no surprise to the company’s management.

The NBN’s role as Australia’s main wholesale fixed line bandwidth provider was locked in when the controlling NBN Co was founded by the former progressive Labor federal government in 2009 as a primarily fibre-to-the-premises (FTTP) network roll-out.

Since then, the NBN has gone through many architectural changes as the present conservative coalition government sought to reduce the cost of the roll-out, through measures such as employing fibre to the node technology in place of FTTP, and using existing cable TV network infrastructure.

In an email to staff revealed in the Australian Financial Review, Telstra said it would bring its Global Enterprise and Services unit’s separate sales and services functions into one team, and change the name of the unit to Telstra Enterprise.

The Telstra Retail unit would also score a new moniker, becoming Telstra Consumer and Small Business.

Telstra Business would be dissolved, with those serving large companies being moved into Telstra Enterprise and small business teams remaining under the control of Telstra Consumer and Small Business.

Telstra is not the only large telco in Australia squeezing its employee roster. Singtel-owned Optus let go of 320 people in a restructuring exercise in April 2017 as it sought to become more of a multimedia and mobile business.

The Communication Workers Union (CWU), which covers many of the 1,400 soon-to-be redundant workers, said it was blindsided by Telstra’s restructuring announcement.

“We were simply ambushed,” CWU president Shane Murphy told the AAP news service. “It has been poorly planned, poorly handled and we believe the CEO has a lot to answer for,” he said.

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