Wednesday, 20 June 2018 08:22

Telstra to cut 8000 employees, contractors by 2022 Featured

Telstra chief executive Andy Penn. Telstra chief executive Andy Penn. Supplied

Australia's biggest telco Telstra has announced that it will effect a net reduction of 8000 employees and contractors by 2022 and reduce two to four layers of management, leading to the cutting of one in four executive and middle management roles.

In a statement to the Australian Stock Exchange on Wednesday, ahead of a planned strategy announcement later in the day, the company also said it would create a new infrastructure business unit, InfraCo, "to drive performance and provide future optionality for a demerger or the entry of a strategic investor in a post-NBN rollout world". The new strategy has been given the moniker Telstra2022.

Chief executive Andy Penn said the dividend for FY18 would be 22 cents per share and dividend decisions for FY19 would be announced during the financial year.

“We are creating a new Telstra that is able to continue to lead the market. 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 that some roles will no longer be required, some will change and there will also be new ones created,” Penn said.

“We understand the impact this will have on our employees and once we make decisions on specific changes, we are committed to talking to impacted staff first and ensuring we support them through this period.”

The following guidance was provided for FY19:

  • Income to be in the range of $26.6 billion to $28.5 billion;
  • EBITDA to be in the range of $8.7 billion to $9.4 billion (before restructuring costs of approximately $600 million);
  • Net one-off Definitive Agreements receipts less NBN net cost to connect in the range of $1.8 billion to $1.9 billion;
  • Restructuring costs of approximately $600 million; and
  • Capex to be in the range of $3.9 billion to $4.4 billion.

The Telstra2022 strategy envisions the company remaining the premium telco brand that will lead and win in the 5G market that is expected to bloom from next year onwards.

In May, Telstra announced a downgrade of its results for FY18, saying it would come in at the bottom end of guidance – between $10.1 billion and $10.6 billion.

The Telstra2022 strategy has the following goals:

  • Reducing the number of consumer and small business plans from 1800 to 20.
  • Migrating all consumer and small business products and plans and 50% of enterprise customers to completely new technology stacks within three years and leaving the legacy behind.
  • Establishing a standalone infrastructure business unit to drive improved performance and create optionality for the future including a potential demerger or the entry of a strategic investor post-rollout of the NBN.
  • Reducing 2-4 layers of management across the organisation.
  • Eliminating the need for one-third of customer service calls within two years and two-thirds by FY22.
  • Leading in all key industry surveys for network performance.
  • Increasing our productivity program by a further $1 billion to $2.5 billion by FY22.
  • Monetising up to $2 billion in assets over the next 24 months to strengthen the balance sheet.

Telstra InfraCo will be a separate business unit, with its chief executive reporting to Penn. It will manage Telstra’s fixed network infrastructure including data centres, non-mobiles related domestic fibre, copper, HFC, international sub-sea cables, exchanges, poles, ducts and pipes. Its services will be sold to Telstra, wholesale customers and NBN Co.

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.

“As technology innovation is increasingly relying on connectivity, the role of telecommunications infrastructure is becoming more important," Penn said.

"There is virtually no technological innovation happening today that does not rely on a high-quality, reliable, safe and secure telecommunications network. In this world our infrastructure assets are becoming more valuable. By creating a new infrastructure focused business unit we will better optimise and manage these assets."

Telstra's mobile network assets including spectrum, radio access equipment, towers and some elements of backhaul fibre will remain integrated with the company's customer segment focused business to support the company’s network differentiation.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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