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Telstra to cut 1,400 jobs as part of 'urgent' reforms

Telstra is pitching itself as the telco of the future, but an era of "unprecedented" disruption now means one in 20 staff are facing the axe.


Thinks are not looking rosy for Telstra.


Australia's biggest telco is about to become smaller (at least in its company headquarters) with news that Telstra is set to cut 1,400 staff. 

The company confirmed the cuts with CNET, with CEO Andy Penn issuing a letter to staff to explain the decision. The downsizing equates to roughly 4 percent of Telstra's workforce -- as of December 2016, the company had the equivalent of 32,551 full-time workers on its staff. 

In his letter to staff, Penn said Telstra "faces an unprecedented world of technology innovation and digital disruption" and that the company needs to adapt to survive. 

"I strongly believe we can succeed in this environment, however to do so we need to transform, urgently," he wrote. "This is particularly the case where these trends are combined with the increased competitive pressures and the accelerated rollout of the nbn. 

"This means we will need to become a leaner organisation, one built on digitised systems and services for customers and employees, and one where we will continue to rely on partners for scale."

Penn's comments highlighted two key factors involved in the restructure: the expenses associated with rolling out the NBN (and lower than expected resale margins on NBN services), and a commitment made by the company last year to invest AU$3 billion to meet "strategic priorities."

That big cash splash brings with it necessary belt tightening, and Penn said Telstra was "working on how best to design the organisation to achieve these objectives."

It's a major blow for Telstra which has been going through something of a facelift over the past 12 months, shifting away from its previous image of poles-and-wires telco and the government-owned Telecom of the past, into a technology-first company of the future. That's seen a push into entertainment and smart home applications, as well as its conventional mobile and fixed-line businesses. 

Penn said the "organisational restructures" would affect its retail, operations, marketing and media and enterprise services teams. Those 1,400 roles will be shed over the next six months across all levels of seniority and all states and territories (including international operations). 

It's unclear which operations will be affected or what timeline Telstra has laid out for the cuts. Telstra has been contacted for comment. 

First published June 14, 12.29 p.m. AEST.

Update, June 15 at 12:50 p.m.: Adds comments and additional detail from Telstra CEO.