Telstra chief executive Andy Penn has declared war in the battle for mobile market share by slashing an extra $1 billion of costs, simplifying mobile plans and splitting off old infrastructure into a separate business as the telco radically reshapes itself to deal with intensifying mobile and broadband competition.

More than 8000 jobs will be lost and $500 million in revenue sacrificed over three years as Australia's dominant telco tries to assuage investors angered by a 36 per cent slump in the share price over the past year, with investors judging Telstra too slow to respond to the squeeze on mobile margins from new competitors such as TPG Telecom and on broadband margins by the rollout of the national broadband network.