Telecommunications

Telstra to slash 8,000 jobs and cut $1 billion in costs while refocusing plans for SME customers

Dominic Powell /

In a bombshell announcement, telecom giant Telstra yesterday revealed it would be axing over 8,000 jobs and reducing its number of plans from 1,800 to just 20 as part of a widespread cost-cutting and simplification strategy called “Telstra2022”.

The strategy will have four “key pillars”, focused around simplifying product offerings, a stripping-down of Telstra’s organisational structure, a $2 billion strengthening of its asset sheet, and a new wholly-owned standalone business to deal with its infrastructure services called Telstra InfraCo.

The whopping 8,000 employees set to lose their jobs will be largely members of middle management, with the company saying one-in-four executive and middle management positions were set to be shelved.

“The rate and pace of change in our industry is increasingly driven by technological innovation and competition. In this environment traditional companies that do not respond are most at risk. We have worked hard preparing Telstra for this market dynamic while ensuring we did not act precipitously,” Telstra chief executive officer Andrew Penn said in a statement

However, we are now at a tipping point where we must act more boldly if we are to continue to be the nation’s leading telecommunications company.”

In news that will likely affect a large chunk of Australia’s two million plus small business owners, a key tenet of the telco’s new restructuring involves a hefty simplification of its mobile and internet plans, with the company retiring its 1,800-plus consumer and small business plans.

Instead, it will replace them with just 20 core plans “backed up by an effortless digital service that removes complexity and provides cost certainty”. This will be kicked off in July with a new “peace of mind” data offering, giving customers additional data services capped at a speed of 1.5 megabits per second after their data runs out.

The restructure will also aim to reduce the amount that small businesses have to contact Telstra with enquiries, something group executive of consumer and small business Vicki Brady said in a blog post Telstra knows “frustrates” customers.

This will be done through a revamp of Telstra’s legacy systems, removing “legacy systems, manual processes and numerous screens” with a set of new digital tools.

“We expect the number of customer service calls we receive will go down by around a third within two years,” Brady said.

Telstra is also launching a new bundle for small business customers called Connected Workplace, which will package up voice/video calling, collaboration, and messaging, on a private network with “embedded security”.

“It will bring enterprise-grade technology to small and medium-sized companies to allow them to focus on running their business and less time on their technology,” she said.

The deal was received poorly by the market, with Telstra shares dropping 7.4% to a seven-year low of $2.695 upon the announcement.

NOW READ: Customers kept waiting for Telstra TVs: How to deliver on promo deals without disappointing shoppers

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany.

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