The company, which has about 74,000 employees, will make the job cuts during its current fiscal year ending June 1997, according to an Associated Press report.
Australia's government plans to sell one-third of Telstra for about 8 billion Australian dollars ($6.4 billion). The country has been moving toward deregulating its telecommunications industry for several years and is aiming for wide-open competition by July 1997.
Privately owned Optus Communications, Australia's number-two 2 long distance carrier, was created to compete with Telstra in long distance in 1991.
Last month, Optus introduced a cable network designed to carry TV, telephone, and data signals in one wire. The system offers local phone service at a 20 percent discount compared with Telstra's service.