Sydney :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.
To create a leaner operation, it will also split its mobile and infrastructure divisions into separate businesses.
“We are creating a new Telstra that is able to continue to lead the market,” said chief executive Andrew Penn.
“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.
“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 earnings 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, crashing almost seven percent at one point before bouncing slightly to be trading 5.3 percent lower at Aus$2.75 late morning.
CMC Markets chief market analyst Michael McCarthy said the restructure 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.