RT Communications in administration as Telstra cuts contractors
Telstra cost-cutting has been blamed for the collapse of a local homegrown IT company, which has seen the loss of 50 jobs on the Central Coast and a further 50 in Brisbane and Melbourne.
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RT Communications was placed into administration on Monday after largest client Telstra suspended all its contracts with the company.
RT Communications was founded by former Telstra employees Richard Reed and Graham Tyley in 2002 to build telephone exchanges, optical fibre networks, Wi-Fi and other IT projects.
With a head office at Tuggerah, it grew to 100 staff with offices in Brisbane and Melbourne and worked on thousands of projects for Telstra.
But that all came to a crashing heap on Thursday when the directors said they received a letter from Telstra suspending all its existing contracts with Australia’s largest telco.
Mr Reed said the letter cited four reasons, which included “safety issues”.
“We take safety very seriously, we’ve had an unblemished record,” he said.
“We believe the reasons for the suspension were pretty flimsy.”
Mr Reed said RT Communications responded to Telstra’s letter outlining why the four reasons cited by the telco could be explained, mitigated or worked through but received no response.
He said RT Communications were given no opportunity to appeal Telstra’s decision and — placed in the “tenuous position” of possibly trading while insolvent — had to make the agonising decision to appoint administrator BDO at 9.01am on Monday.
Mr Reed said RT Communications was still in discussions with its lawyers.
“We had national contracts with Telstra,” he said.
“This was our best year. We really don’t know why this has happened. We feel incredibly hard done by.”
Mr Reed said while he conceded there were some “safety breaches”, the reasons given by Telstra did not justify suspending RT Communications’ contracts.
“The punishment doesn’t fit the crime,” he said. “It’s like throwing out the baby with the bath water.”
Telstra’s CEO Andy Penn has made no secret of the telco’s plans to axe a quarter of its contractors over the next two years as part of its T22 strategy.
The cuts will see about 10,000 contractor roles disappear over the next two years in addition to 8000 cuts to Telstra’s permanent staff announced in June 2018.
Meanwhile Mr Reed said a successful Central Coast business along with 50 staff, who’s families depended on RT Communications, had been trashed by Telstra’s “unconscionable behaviour”.
A Telstra spokesman said the suspension of contracts with RT Communications had nothing to do with Telstra’s restructuring. Instead he said it was purely for safety reasons.
“Telstra was recently made aware of a serious safety breach by contractor RT Communications (RTC), which came after Telstra had raised several other safety incidents with RTC,” he said.
“Following the serious safety breach, Telstra conducted an audit of RTC’s health and safety practices and found they did not meet the standards we expect of our contractors.
“As a result, Telstra has suspended any work RTC is carrying out for Telstra pending the remediation of health and safety issues.
“We understand this is a difficult time for RTC personnel. However the health and safety of our employees, contractors and the community is of paramount importance to Telstra, and we cannot compromise this in any way.”