Telstra to Cut Up to 12,000 Jobs

SYDNEY, Australia -- Telstra Corp., Australia's largest telecommunications company, today announced it will eliminate up to 12,000 jobs by 2010 as part of a restructuring that could reduce its earnings by as much as 30 percent this fiscal year.

Telstra's chief executive, Sol Trujillo, who took over in July, said at an investors meeting in Sydney that the Australian telecommunications industry was based on price competition in a downward spiral and was not adding enough value to its customers.
"We will not require the same number of employees and contractors as we implement the strategy because we will reduce complexity." he said. "We're going to be reducing the full-time equivalent head count between 6000 and 8000 over the next three years and between 10,000 and 12,000 over a five-year period." Telstra currently has 52,000 employees.

Telstra's Chief Operations Officer Greg Winn said a review of Telstra's operations over the past four months showed that investment was spread across far too many networks and technologies.

Telstra said a market-based management plan outlined by Group Managing Director Strategic Marketing Bill Stewart will include needs-based and value-based segmentation following extensive customer research. Telstra's program will involve interviews with 90,000 consumer customers. It will build a panel of 16,000 small businesses to attempt to understand its customers' needs.

Telstra plans to cut the number of its complex business support and operational support systems by 75 percent in three years and transform the IT capability to deliver new cost-effective capabilities.

Winn said a centralized program office will orchestrate the changes through the company and that management will invest 200 million Australian dollars ($145.6 million) to train its workers to build and maintain the company's telephone networks.

The company's stock fell plunged 6.9 percent to 4.02 Australian dollars ($2.93) on the Australian Stock Exchange.

Trujillo, an American, was brought on board to oversee the privatization of the government's remaining 51.8 percent stake in the company. The world's largest share sale is slated for the fourth quarter of 2006 and will be aimed at both local and overseas investors.

Trujillo said annual net profit could fall up to 20 percent each year until 2010 if the "status quo" continues and the government fails to implement a "reasonable" regulatory climate. "If excessive regulation doesn't get in the way, we can hit the plan we have laid out today. If it does get in the way, it has the potential to be harmful to our core," he said.

For more information, visit: www.telstra.com.au/