Telstra to cut 1,100 jobs in next nine months to lift productivity

TELSTRA, Australia’s biggest phone company, said yesterday it would cut 1,100 jobs in the next nine months to boost productivity, as a waning mining boom pushed unemployment to a four-year high.

The cuts to Telstra’s operations unit, representing about 3% of its 37,721 workforce at the end of June, would stop duplication of work and help the division focus on growth, chief operations officer Brendon Riley said. It is about 6% of jobs in the operations business, Mr Riley said.

Australian companies have been shedding jobs amid a weakening economy which has forced the Reserve Bank of Australia to cut interest rates to a record low and contributed to former prime minister Kevin Rudd’s September 7 election defeat. Ford Motor announced in May that it would end production in the country after nine decades, with the loss of 1,200 jobs, and General Motors’ Holden division said it was awaiting the result of the poll before deciding on investment.

“Sluggish output growth, rising unemployment, low and fragile confidence, and benign inflation” were making it more likely that the central bank would have to cut rates by 25 basis points to 2.25% in November, JPMorgan Chase chief economist in Sydney Stephen Walters wrote in a note on Monday. “The peak in mining investment, which has been the dominant force driving growth in the economy, is very near.”

Australia’s unemployment hit a four-year high of 5.8% in August, according to government data released this month. Employment fell 10,800 from a month earlier.

Telstra had previously announced a combined 1,080 job cuts at its directories unit and call centres. The car- rier’s $103,830 net income per employee is the seventh-highest globally among phone companies with more than $10bn in annual sales, according to data.

The operations unit where the latest cuts are being made is responsible for Telstra’s networks, including building and running cloud computing, data hosting, and internet-based products, according to the company’s website.

“We are finding many examples where we could work better together in a more streamlined and productive way,” Mr Riley said. “We are seeing reductions of roles in declining businesses, due to evolving technologies and the restructuring of our industry and growth in other areas.”

Employees were told about the cuts yesterday with almost half of the planned reductions already explained to workers. Jobs to be eliminated include fixed-network technicians, customer service workers, and media operations team workers.

Telstra spent A$1.3bn ($1.2bn) upgrading its network and bought A$1.2bn of new spectrum last year to tap surging demand for wireless services before it hands its highermargin fixed-line business to NBN, a state company building a national broadband network.