Telstra forecasts mass contractor job losses
TELSTRA cutbacks are expect to result in more than 20,000 people losing their jobs as the company warned of mass layoffs throughout the 40,000 private subcontractor workforce it employs.
Speaking after the company announced a 28 per cent plunge in six-month profit yesterday, Telstra chief executive Andrew Penn said job losses would not be limited to the recently announced 8000 Telstra employees but also an estimated 12,000 private subcontractors.
Mr Penn forecast about 30 per cent of Telstra’s 40,000 indirect, or subcontract, workforce would also be out of work as the teleco continues to restructure after its wholesale broadband business was transferred to NBN Co.
He also said the company may reconsider its commission and bonus payments to staff in light of the recent findings of conflicts of interest by the finance royal commission.
“We have multiple remuneration systems, some of them are linked to customer service feedback, balanced scorecards, it depends on the different areas in the business but we also have incentive based systems,” Mr Penn said.
“These strategies are always under review and we will undoubtedly look at further details coming out of the royal commission and respond to the learnings they provide.”
Telstra reported a 28 per cent fall in profit to $1.22 billion for the six months to Decem$1.63 ber 2018, crunched its halfyear dividend by 27 per cent to eight cents and warned NBN broadband customers they could soon be facing large price rises.
Telstra’s total income during the six months was down 4.1 per cent to $13.79 billion, while earnings before interest, tax and depreciation were down 16.4 per cent to $4.25 billion.
The biggest contributor to the reduced profit was from Telstra’s consumer and small business segment which reported a fall in EBITDA of 14.7 per cent to just $2.95 billion.
The segment includes its mass market mobile and fixed line operations which has up to 10 million customers.
Despite increasing its customer base during the six months, higher wholesale broadband charges, a loss of income from the NBN roll out and increased mobile competition caused profit margins in this segment to fall.
The company’s government and large scale business segment, Enterprise, also reported a 4 per cent fall in EBITDA to million, while its networks and IT segment increased its loss from $651 million last year to $692 million this year.
Telstra’s InfraCo, which houses its infrastructure and wholesale division, was a rare improver with a 32 per cent increase in EBITDA to $1.6 billion.
Mr Penn also had bad news for retail customers, warning of high prices for broadband customers unless NBN lowered its wholesale charges.
“The margin today on NBN reselling is a zero margin but because only 55 per cent of the rollout is completed we still have the benefit of profit margins from our existing business,” Mr Penn said.
“In the end if an industry is ultimately making a zero margin by default that’s not sustainable. The only way to change that industry is increased prices to customers – that’s not good for customers – or the input costs have to change and the biggest input is the wholesale price [from NBN],” he said.