Telstra to slash more than 500 jobs

Australia’s largest telco, Telstra, will cut hundreds of jobs, taking an axe to its headcount amid pressure from investors to lift returns and trim costs.

The cuts come weeks after CEO Vicki Brady laid out a new five-year strategy designed to increase reliance on artificial intelligence technology.

Telstra boss Vicki Brady at Telstra’s investor day in May.Credit: Telstra

Telstra employs about 31,000 full-time-equivalent workers globally, and is planning to shed about 550 employees. The cuts will be made across departments and will be felt “across the board”, one source close to the company said.

Staff were sent a message warning about “proposed organisational change and redundancy” on Wednesday morning, according to internal emails seen by this masthead.

“Today we shared with our employees that we are proposing a net reduction of around 550 roles from across the organisation,” a Telstra spokeswoman said.

“These changes are largely driven by the ongoing reset of our Telstra Enterprise business, as well as improvements to the structure and processes of other teams across our organisation, to reduce complexity, create efficiencies, and respond to changing customer needs.

“We are committed to consulting with our people first about the proposed changes. If the changes go ahead we’ll work with the people in the roles that are no longer required to seek to help them find another role at Telstra. If that’s not possible and they end up leaving Telstra, they’ll have access to our redundancy package and a range of support services.”

The spokeswoman said that the changes were not a result of AI adoption.

The telco will face pressure to maintain service levels for its premium-paying customers despite employing fewer staff. Telstra last year slashed 2800 workers, a move Brady said at the time would save up to $350 million and help the telco stay competitive amid rising inflation and energy costs.

Those cuts were described as “very distressing” by Treasurer Jim Chalmers and a “national disgrace” by the Communications Workers Union.

Then, in January, Telstra announced a $700 million AI joint venture with consultancy giant Accenture, to build specialised AI tools for its teams to “work smarter and faster”. The telco at the time did not rule out job cuts as a result of the move, and said it would consult employees and unions about its use of artificial intelligence.

Accenture global CEO Julie Sweet (left) struck a joint venture with Telstra CEO Vicki Brady in January.Credit: Telstra

The telco is plotting the cuts as AI tears through the broader Australian workforce, with fears that as many as one in three workers are at risk of job loss from AI by 2030. Microsoft terminated 9100 global staff last week in its second mass cull in months.

Shares in Telstra are up about 20 per cent since the start of the year. The company provides retail mobile services to 22.5 million customers.

In May, Brady unveiled Telstra’s new five-year strategy alongside price rises for most of the company’s mobile and internet plans of between $3 and $5 per month.

The strategy, dubbed “Connected Future 30”, emphasises an increased reliance on artificial intelligence processes and data centres, amid what Brady described as “unrelenting” demand for data and connectivity. The strategy aims to lift returns from 8 per cent to 10 per cent annually.

Brady flagged with investors, however, that Telstra’s embrace of AI could result in job cuts.

“Our workforce will look different in 2030 as we develop new capabilities, find new ways to leverage technology – including AI – and we have to stay focused on becoming more efficient,” she told investors in May.

“We will need to continue to evolve, and our commitment is to always be transparent with our employees and act with care once we are clear on specific changes... We don’t know precisely what our workforce will look like in 2030, but it will be smaller than it is today.

“The environment that we’re competing in is fast changing, so we must move fast too.”

Chief financial officer Michael Ackland told investors that Telstra was “leaning in hard” on artificial intelligence opportunities.

“We spend over $2 billion per annum in operating costs across activities from sales to contact centres, activation, billing and customer management. And we think AI will revolutionise these activities.”

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