Tectonic shifts in Aussie telco market

Published on the 22/06/2018 | Written by Pat Pilcher


Telstra_staff_2018

'Radical, bold' reset sees Telstra slash 8,000 jobs...

Australia’s incumbent telco, Telstra, is shedding a quarter of its workforce, spinning off its infrastructure business and ‘radically’ simplifying product offerings as it attempts to reset itself and search for growth in the face of continued disruption within the telco sector.

Andrew Penn, Telstra CEO, said the telco was at a tipping point, requiring it to act ‘more boldly’: “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. We have worked hard preparing Telstra for this market dynamic while ensuring we did not act precipitously.”

The ‘radical transformation’ will see an estimated 8,000 jobs cut, including one in four executive and middle management roles.

According to Penn “The future of our workforce will be a smaller, knowledge-based one with a structure and way of working that is agile enough to deal with rapid change”.

“The future of our workforce will be…agile enough to deal with rapid change.”

The new infrastructure business, which comes into being on July 1 will be called Telstra InfraCo. It will not include mobile network assets, with Telstra looking to 5G as a significant growth opportunity.

The new unit will include fixed network infrastructure including data centres, domestic fibre – non-mobile related only – copper, HFC and international subsea cables, and exchanges along with Telstra’s non-commercial works activities and Telstra Wholesale. Services will be on-sold to Telstra as well as other wholesale customers.

Telcos around the world are reshaping themselves, transitioning away from providing legacy telco offerings to become OTT digital services providers.

Telstra has in the past paid handsome dividends and has long been seen as a safe investment bet, but more recently, has struggled. This announcement comes as NBN continues to erode legacy revenues. Deprived of any obvious growth avenues and unsuccessful in bids to rekindle growth Telstra has also been unsuccessful with acquisitions and Asian ventures.

Telstra’s moves are erily similar to those of Spark NZ, which embarked on a programme last year to become Agile. That programme has seen 1,900 product and marketing staff given an ultimatum to sign new contracts and embrace Agile, or take redundancy.

Regulatory pressure saw Spark divesting itself of its network infrastructure arm in 2011 before it was able to take part in New Zealand’s ultrafast fibre rollout. Today Spark reported that half of their broadband customers had ditched legacy copper (ADSL and VDSL) to take up new broadband technologies. Spark says that 34 percent are now on fibre with a further 16 percent on 4G broadband (delivered over Spark’s 4G and 4.5G mobile networks).

 

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