Australia’s dominant telecommunications company Telstra Wednesday announced plans to axe 8,000 jobs – a quarter of its workforce – as part of a drastic new strategy to cope with an increasingly competitive industry.
The decision by the company, one of Australia’s largest employers, is part of a shake-up targeting an extra Aus$1 billion (US$750 million) in cost-cutting by 2022, on top of Aus$1.5 billion previously announced.
It will also split its mobile and infrastructure divisions into separate businesses.
“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,” said chief executive Andrew Penn.
“This means that some roles will no longer be required, some will change and there will also be new ones created.”
The cuts come less than a month after Telstra said its 2017/18 earnings will likely be at the bottom of its guidance range of Aus$10.1 billion to Aus$10.6 billion, blaming increasing competition in mobile and fixed broadband.
That warning sent its shares tumbling to a more-than six-year low of Aus$2.71.
They had partially recovered since, but took another hit on Wednesday, closing 4.81 percent lower to Aus$2.77.
CMC Markets chief market analyst Michael McCarthy said the restructuring plan may not be enough to please investors, who have watched Telstra’s share price almost halve in the past year.
“Some investors think the Telstra patient needs radical surgery, and could view today’s measures as band-aids,” he said.
Telstra employs 32,000 people across 20 countries, according to its most recent annual report. Of the jobs to go, one in four will be executive and middle management roles.
Prime Minister Malcolm Turnbull called the announcement “heartbreaking” for the workers, but said he was confident most would find other jobs.
