Australia telecoms giant Telstra to axe 8,000 jobs - a quarter of its workforce - to save A$1 billion

Telstra has lost out to smaller rivals after its high-margin, fixed-line access business migrated to a state-run network, and mobile-phone competitors lured customers away with cheaper offerings

PUBLISHED : Wednesday, 20 June, 2018, 5:33pm
UPDATED : Wednesday, 20 June, 2018, 8:25pm

Australia’s dominant telecommunications company Telstra has 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.

The decision by one of the country’s largest employers is part of a shake-up targeting an extra A$1 billion (US$750 million) in cost-cutting by 2022, on top of A$1.5 billion previously announced.

To create a leaner operation, it will also split its mobile and infrastructure divisions into separate businesses.

“We are creating a new Telstra that is able to continue to lead the market,” said chief executive Andrew Penn on Wednesday.

“This means that some roles will no longer be required, some will change and there will also be new ones created.”

The cuts come less than a month after Telstra said its 2017/18 earnings will likely be at the bottom of its guidance range of A$10.1 billion to A$10.6 billion, blaming increasing competition in mobile and fixed broadband.

Telstra shares fell more than 7 per cent in early trading on the Australian stock market after the announcement to A$2.70, its lowest price since 2011.

The company employs 32,000 people across 20 countries, according to its most recent annual report. Of the jobs to go, one in four will be executive and middle management roles.

The telecoms firm has a range of businesses including fixed broadband, mobile, data and IP, network application and services and digital media.

Part of its new strategy will see it create a wholly-owned stand-alone infrastructure business unit from July 1.

Called Telstra InfraCo, it will comprise fixed-network infrastructure including data centres, non-mobiles related domestic fibre, international subsea cables, exchanges, poles, ducts and pipes.

Its services will be sold to Telstra, wholesale customers and Australia’s National Broadband Network, controlling assets with a book value of about A$11 billion.

The Communications Workers Union, which represents Telstra staff, said the cuts would impact the company’s ability to service customers, particularly those who live outside major cities.

Additional reporting by Associated Press and Bloomberg