Telstra to Cut 2,800 Jobs in Major Restructuring Move

People walk past a Telstra store on Melbourne's central business district on June 20, 2018. (William West/AFP via Getty Images)

Australian telco giant Telstra will axe up to 2,800 jobs or 9 percent of its workforce in a major shakeup to cut costs.

On May 21, Telstra announced that it would carry out a “reset” of its enterprise business, which focuses on providing network and other digital solutions to enterprise customers, by simplifying its operations and improving productivity.

Telstra CEO Vicki Brady said the proposed restructuring was necessary to ensure the company could continue to invest in its infrastructures and operation processes. Technological advances, inflationary pressures and a competitive landscape were the key factors behind the decision, she noted.

“Telstra’s ongoing investment in infrastructure, technology, innovation and service for our customers drives growth and underpins Australia’s digital economy, contributing to the prosperity of the nation,” she said.

“This is occurring within a dynamic environment, with an evolving competitive landscape, rapid advances in technology, changing customer needs, and the ongoing inflationary pressures facing all businesses.”

Telstra undertook a detailed review of its enterprise business in February and identified a number of areas that needed to be worked on.

Specifically, the telco wanted to reduce the number of NAS (network, applications, and services) products it was offering by nearly two-thirds.

The company would also focus on “simplifying” its customer sales and service model and reducing the cost base of the Telstra Purple tech services business.

Ms. Brady said Telstra would provide support for affected employees during the reorganisation.

“I appreciate the uncertainty proposed changes like this can create for our people, and we will support them through this change with care and transparency,” she said.

“As we propose specific changes, we will talk them through with our teams and union representatives first.”

The company expected the majority of the layoffs to occur at the end of 2024.

However, Telstra said it would immediately consult with 377 employees in supporting roles about the restructuring.

Other Changes in Telstra’s Operation

Apart from the restructuring, Telstra will move its Global Business Services function into other parts of the business to simplify operating processes.

At the same time, the telco giant will carry out other measures to reduce its non-labour and indirect labour costs.

The company estimated it would save $350 million (US$234 million) with these actions by the end of the 2024-25 financial year.

However, the reorganisation was expected to cost the company between $200 million and $250 million across the 2023-24 and 2024-25 financial years.

Telstra projected that the company’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) would reach $8.4-$8.7 billion in the 2024-25 financial year and was committed to delivering other profit metrics from its T25 strategy.

In the last few years, the company has been pursuing a comprehensive business plan, T25, to help it achieve sustainable growth and a $500 million cost reduction.

As part of the T25 strategy, Telstra has deployed AI across half of its business operations, with the goal of fully implementing the technology in the coming years.

Ms. Brady said Telstra had made good progress and was currently around 12 months from completing its T25 strategy.