Thursday, July 18, 2024

Telstra’s ‘massive change’ has ‘blindsided’ workers, but will it pay off for customers and shareholders?

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Telstra has revealed plans to sack up to 2,800 workers as part of its latest cost-cutting measures.

The telco said the majority of the job cuts would happen by the end of this year.

Telstra had more than 31,000 employees at the time of its last annual report in August 2023, meaning that the job losses represent roughly 9 per cent of its workforce.

“I appreciate the uncertainty proposed changes like this can create for our people and we will support them through this change with care and transparency,” said Telstra’s chief executive Vicki Brady.

“As we propose specific changes, we will talk them through with our teams and union representatives first.”

In a statement to the ASX, Telstra said it would begin consultation on 377 of those affected roles with unions and the relevant teams immediately.

Most of the affected Telstra workers will lose their jobs by the end of this year.(ABC News: Stephen Cavenagh)

Communication Workers Union (CWU) national assistant secretary James Perkins said staff representatives had no prior warning of the planned lay-offs.

“We were absolutely unaware and we’ve been blindsided by this decision,” he told The World Today.

“We cannot possibly see how Telstra can go on maintaining the level of service it needs to satisfy its customers’ expectations when you’ve just cut another 9 per cent of your workforce.”

Telecommunications management and business consultant Paul Budde said job cuts were not a surprise, but the scale of them was.

“It’s not just a matter of continuing to fine-tune or readjust — this is a massive change,” he told ABC News.

These roles are within Telstra Enterprise, which provides communication services to big businesses.

“As we look to streamline our network application and services portfolio, as part of that work, we may well partner with other players in the market to be able to provide those services,” the Telstra CEO told reporters.

“We may transition customers to other players that can provide some of those more specialised services.”

Telstra drops inflation-linked mobile price rises

Female hands holding a mobile phone with a dark background.

Analysts warn Telstra may be delinking phone plan price rises from the Consumer Price Index to put through bigger hikes later this year.(Unsplash: Priscilla du PreezLicense)

As part of the redundancy announcement, Telstra also revealed that it would drop controversial inflation-linked price increases from its post-paid mobile plans.

Ms Brady said that meant there would be no price rise on July 1.

“We will not be making pricing changes in July for our consumer post-paid mobile plans,” she told reporters.

“Our pricing review continues, as you would expect, across all of our products.”

UBS telco analyst Lucy Huang said that may not end up being good news for customers, as inflation kept falling.

“TLS (Telstra) suggests this gives them more flexibility on pricing review (e.g. Vodafone put through higher than CPI linked price increases in late Mar/early April this year),” she wrote in a short note reacting to Telstra’s announcement.

Barrenjoey analysts Eric Choi and Annie Zhu agree.

“Investor feedback had suggested TLS could have the ability to push prices up by more than CPI – we therefore theorise TLS could be delaying price increases in FY25 (but eventually announce increase greater than CPI),” they wrote.

Ms Brady also said the redundancy program would not negatively affect retail customer service.

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