Telstra has announced a new strategy.
Telstra has announced a new strategy.

Drastic cuts to Telstra’s phone plans

TELSTRA is going to slash 8000 jobs from its workforce as part of a new strategy to "improve customer experience, simplify structure and cut costs".

Chief executive Andy Penn said the industry had reached a tipping point and Telstra had no choice but to implement a new strategy.

"I think the current nature of telecommunications products and services is unsustainable and it has to change and we at Telstra are going to lead that change," he said.

The telecommunications giant will cut 8000 employees and contractors - including one in four executive and middle management roles. This would equate to roughly a quarter of Telstra's entire workforce.

Mr Penn highlighted that the strategy was not about cutting jobs, but fundamentally transforming the nature of telecommunications services for customers in Australia.

"It's about reducing the number of plans we have from 1800 to 20. If we can deliver that, and make this sort of change and improve the simplicity and get rid of the charges that drive customers," he said.

"When I look at a lot of the activity in the business, it's dealing with issues and complications and problems that we've created for customers because of the complexity in the design of the product."

Mr Penn said simplifying product offerings and structure enables Telstra to increase its productivity program by an extra $1 billion to $2.5 billion, but would have an impact on the number of jobs at Telstra over the next three years.

"That's obviously very difficult news to share, because Telstra is an amazing organisation, amazing family of people and that was why it was so important for me to speak to the teams first in delivering that news," he said.

The cuts will have a strong focus on management and executive-type roles initially, with no bias shown toward onshore and offshore jobs or regional and metro roles.


Andy Penn said the industry is at a tipping point.
Andy Penn said the industry is at a tipping point.

Mr Penn added the cost of the changes would be about $600 million, with the company putting forward $50 million for a transition program to support those affected by the cuts.

"The $50 million transition fund is supporting in relation to enhanced outplacement services, post-employment support, training, coaching, those sorts of things as well," he said.

Mr Penn said while roles would no longer be required, he was hopeful new positions might be created.

"It does raise the issue of ongoing employment as technology advances and obviously a lot of the technological advance makes many of these positions redundant because they're aiming to reduce the amount of customer service calls, for instance, by two-thirds by 2022," he said.

Federal Labor frontbencher Richard Marles described Telstra's decision as a "huge shock".

"That is a very significant number of employees - even over that period of time - and this is going to be a very difficult day for every Telstra worker," he told Sky News.

In an earlier statement, Mr Penn said the strategy would fundamentally change the nature of telecommunication products and services in Australia.

"We will take a bolder stance and use the disruption in the telecommunications industry to lead the market for the benefit of our customers, employees and shareholders," he said in the statement.

"The rate and pace of change in our industry is increasingly driven by technological innovation and competition. In this environment traditional companies that do not respond are most at risk."

Known as Telstra2020, the three-year strategy would see the company focus on four key goals.

• Telstra hopes to create all digital experiences by greatly simplifying product offerings and eliminating customer pain points.

• The telco wants to establish a stand-alone infrastructure business to drive performance and give options following the nbn rollout.

• Telstra has plans to radically simplify its structure and ways of working to better serve customers.

• It hopes to implement an industry leading cost reduction program and perform better portfolio management.

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