The head of Australia's Communication Workers Union has called for Telstra chief executive Andy Penn to walk back major workforce cuts announced by the telco this morning, criticising the move as "putting short-term profits above long-term services" for Australians.
Andrew Penn, Telstra's chief executive, said the strategy would fundamentally change the nature of telecommunication products and services in Australia by eliminating "pain points" for customers. "This means that some roles will no longer be required, some will change and there will also be new ones created", Penn said. Penn has lifted that target by $1 billion to $2.5 billion by 2012-22.
Establishing a standalone infrastructure business unit to drive improved performance and create optionality for the future including a potential demerger or the entry of a strategic investor post-rollout of the NBN.
The telecommunications giant, which had already targeted $1.5 billion in savings, says one in four executive and middle management positions will go as it cuts 8,000 employees and contractors over the next three years. "In this environment, traditional companies that do not respond are most at risk", he said in a statement.
"We are creating a new Telstra that is able to continue to lead the market".
Telstra has a range of businesses including fixed broadband, mobile, data and IP, network application and services, digital media and global.
The structural aspect of the strategy involves the creation of a new unit housing all Telstra's infrastructure other than that which supports in mobile network.
"There is virtually no technological innovation happening today that does not rely on a high-quality, reliable, safe and secure telecommunications network". In this world our infrastructure assets are becoming more valuable.
Restructuring costs are expected to reach AU$600 million for FY19, with an earnings before interest, tax, depreciation, and amortisation (EBITDA) guidance of between AU$8.7 billion and AU$9.4 billion by then.