Thousands of Telstra employees are facing job losses after the company announced an overhaul to the telco to remain competitive.
8000 jobs will be cut in an effort to save $1 billion across three years by the 2022 financial year, that will take the total cost reduction to $2.5 billion.
The job cuts will involve employees and contractor positions largely drawn from management, with one in four executive and middle management positions to be axed.
Telstra chief executive Andy Penn said the measures were needed to stay on top of an increasingly competitive telecommunications market.
“The rate and pace of change in our industry is increasingly driven by technological innovation and competition,” Mr Penn said in a note to the share market on Wednesday morning.
“We are now at a tipping point where we must act more boldly if we are to continue to be the nation’s leading communications company.”
He said Telstra understood the concern of employees.
“We understand the impact this will have on our employees and once we make decisions on specific changes, we are committed to talking to impacted staff and ensuring we support them through this period.
Mr Penn said the changes reflected a changing communications market.
“In the future, our workforce will be smaller, knowledge-based one with a structure and way of working that is agile enough to deal with rapid change,” he said.
“This means that some roles will no longer be required, some will change and there will also be new ones created.”
Telstra said the restructure would focus on simplifying its product range to attract more customers.
Part of the cost savings would include by moving customers from 1,800 current consumer and small business plans to just 20 plans.
It will also eliminate two thirds of customer service calls in the next two years.
However, Telstra maintains that it will remain a “premium” telecommunications brand while it rolls out its 5G mobile networks.
Treasurer Scott Morrison said the Telstra employees and their families would be nervous about the announcement, but the federal government was working to ensure they had new jobs.
“It will be hard and it still will be an anxious time for those Australians,” Mr Morrison said outside the AAP Master Builders National Leaders Summit in Canberra.
“That is why we will continue to redouble our efforts to ensure we are doing everything we can to create the stronger economy that people who find themselves in that situation.”
Telstra’s structural changes have sent company shares down more than seven per cent in early trade on the ASX.
Stock reached $2.70 at 10:24 AEST, the lowest level since 2011.