Australia’s Telstra unveils massive job cuts in strategic reset

SYDNEY: Australia’s largest telecom firm Telstra Corp Ltd said it would cut a quarter of its workforce and flagged asset sales on Wednesday, as competition and new technology crush its mainstay fixed-line businesses and force a strategic reset.

The struggling telco said it would shed 8,000 jobs from a workforce of 32,000 to save A$ 1 billion ( US$ 738 million), in what unionists said was the biggest single loss of jobs by an Australian company since the collapse of Ansett airline in 2001.

Telstra also forecast lower earnings next year, and said it would separate fixed-line assets it values at A$ 11 billion from the rest of the firm in preparation for a potential demerger or strategic partnership.

The strategy statement was promised in May as the firm’s response to sliding earnings and a rapidly changing market, but if it was meant to boost investors’ confidence it failed as Telstra’s share price sank to a 7-year low following the announcement.

“The million dollar question is whether FY20, FY21 and FY22 are going to remain weak, and nobody’s clear on that,” said Jason Teh, chief investment officer of Vertium Asset Management.

While Telstra dominates Australia’s mobile telephone and broadband markets, profits from traditional fixed-line networks are shrinking as the country rolls out a new broadband network and customers switch to wireless networks crowded with rivals like SingTel’s Optus, Vodafone Group and TPG Telecom. — Reuters