Telstra slashes 2800 jobs as inflation, rising energy prices hit

Australia’s largest telco will ‘simplify’ its business as it too faces the pressures of an inflationary environment and increasing competition from big tech companies.

Telstra has said it would slash up to 2800 jobs, shedding nine per cent of its workforce, as it keeps pace with ‘rapid advances in technology’. Picture: AFP

The nation’s largest telco says inflation and rising energy costs have hit it hard and affected its ability to meet financial targets, as it announced a proposal to cut 2800 from its global workforce.

Telstra is cutting as much as 9 per cent of staff, of which it has around 31,000 total, as it looks to reach drastic savings plans under its T25 strategy.

Chief executive Vicki Brady said Telstra expects to save as much as $350m from the cost cutting measures, despite the redundancy and restructuring costing the telco between $200m to $250m.

“We also haven’t been on track to deliver our cost out ambitions. Higher than expected inflation and cost pressures, including energy costs, have made meeting this ambition more challenging,” Ms Brady said on Tuesday.

While Telstra had ruled out any major changes to its business as result of losing almost one tenth of its workforce, the Communications Workers Union and Federal Treasurer Jim Chalmers both slammed the telco and said it would have to answer for its actions.

Mr Chalmers said the decision, which would be “very distressing” for a number of people, would not avoid government scrutiny.

“We need to make sure that the services don’t suffer as a consequence of these changes. We will be seeking advice from the ACCC about some of the claims that Telstra is making about their new pricing strategy and the role of the NBN,” he said.

While James Perkins, CWU’s national assistant secretary, described the action as a “national disgrace” that “has completely come out of the blue” and would have a “devastating impact on services”.

CWU national assistant secretary James Perkins.

“You can’t slash thousands of jobs without seriously impacting the delivery of services across the country. Telstra has to answer to this,” he said.

Telstra’s major jobs cuts largely pertain to its enterprise business, an area which Ms Brady said would be squeezed with the telco considering offloading some of its largest customers, including ASX200 business, banks and government, to competitors.

For the enterprise customers it keeps, the telco would consider partnering with other providers to continue to offer services.

Telstra’s enterprise business came scrutiny several months ago after failed to deliver as expected at the company’s half year results.

Ms Brady, at the time, said Telstra was reviewing the cost base of its Network and Services (NAS) business, which was “clearly a long way from where we need it to be” after it delivered flat revenue at $1.35bn.

“The work is underway right now in terms of what are the things we need to really get the cost base of our NAS business in the right shape,” Ms Brady said.

Telstra’s T25 strategy included reaching a $500m cost saving, of which it had achieved just $105m in February. The cuts on Tuesday have the telco about 90 per cent of the way there.

Ms Brady outlined an increase in competition as one of the reasons it was looking to simplify its enterprise business, which used a mix of onshore and offshore staff – both were facing cuts under the proposal, with a Telstra spokesman confirming no onshore jobs would be replaced by offshore workers.

“We need to be a more efficient and sustainable business to ensure we can keep investing at the levels required to meet the ever increasing demand for our connectivity and services for our customers right across the country,” Ms Brady said.

“The actions we’re proposing today along with our efforts over recent years, mean we will be able to achieve a cost reduction of 350 million dollars by the end of FY25.”