Telstra expedites job cuts
Telco set to record $500m impairment in FY19
TELSTRA has announced it will record $500 million in impairments in its 2019 fiscal year results on ageing data-storage assets and forecast higher restructuring costs this year as it expedites a plan to reduce jobs.
The firm is in the midst of an overhaul and is cutting a quarter of its workforce, struggling like other incumbent telcos to find a way forward at a time when cutthroat competition and new technology is crushing its mainstay fixedline businesses.
The charges come with Telstra Close Change expecting annual earnings and margins to drop, as a government-owned fibre network, which it must pay to use, replaces a copper system it had monopolised.
“It’s a consequence of reshaping our business,” Telstra CEO Andy Penn (pictured) said on a conference call with analysts yesterday, referring to the NBN network.
“These changes are challenging and they’re tough and they’re difficult for our people but if you look at it in the broader context of the telecommunications market it can be understood in terms of how that work is shifting from Telstra to the NBN.”
Telstra said it had written down its legacy IT assets, mostly customer data-storage hardware and software, after upgrading its systems. It expects to book a $500 million non-cash charge.
The company announced its job cut plan last June and yesterday said it will have shed about 6000 roles by the end of the financial year to June, bringing forward $200 million in restructuring costs.
“We will continue to see role reductions as we replace our legacy systems, digitise and simplify how we work, and respond to things like declining NBN and call volumes, but … we expect the majority of our T22 restructure will be behind us,” said Mr Penn.
Telstra said it had started consultation with unions and staff over the job cuts and expects the process to conclude in mid-June.
Restructuring charges for the rest of its strategic reset will be about $350 million and will fall after the current financial year.
Telstra shares rose 0.5 per cent in early trade, in a falling broader market.
The company’s stock was still 0.3 per cent higher at $3.57 at close. 15.48% 2.33% 1.82% 1.71% 1.70% 1.52% 1.48% Close Change
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