Drastic restructure to help Telstra 'urgently' transform: Penn

Telstra CEO Andy Penn has attributed the decision to sack 1400 workers over the next six months to the impact of the NBN and disruptive new technologies.

Informing staff of the changes on Wednesday afternoon, Penn said the telco needed to "transform, urgently" in order to succeed in a "challenging" environment.

"This is particularly the case where [technology innovation and digital disruption] are combined with the increased competitive pressures and the accelerated rollout of the NBN," he said.

"This means we will need to become a leaner organisation, one built on digitised systems and services for customers and employees, and one where we will continue to rely on partners for scale."

Within the next six months, 1400 Telstra workers across the operations, retail, enterprise services and media and marketing divisions will be let go. 

The changes will affect workers of all levels of seniority and location, including at Telstra's international posts, the telco said.

The operations division will be restructured into four key lines of business - networks, NBN and commercial delivery, IT and digital solutions, and customer service management.

Telstra's retail operations will be renamed Telstra consumer and small business, and contain three core divisions: customer experience and transformation, products, and sales and service. The telco will also "renew" its focus on low-cost ISP Belong.

The global enterprise and services (GES) division will be renamed Telstra enterprise, and the sales and services functions will be merged into one team to ensure "end-to-end accountability" for customers.

Telstra's former business division will be split up into the consumer and small business and enterprise units.

Domestic and international enterprise marketing teams will also be combined to 'streamline' how Telstra goes to market.

Penn said the changes were designed to deliver "simpler end-to-end services", to allow the telco to compete more effectively, and to reduce operating costs.

Telstra last year said it wanted cut costs by $1 billion over five years.

"I understand this is a difficult time for those impacted and their colleagues supporting them – I want everyone to know that the CEO leadership team and the business unit teams have not taken these steps lightly," Penn said.

"We recognise that if these changes proceed, it will mean some valued colleagues will be leaving the business. Change of this magnitude is always hard. I can assure you our proposal for these changes has been made after careful deliberation."

Penn singled out a $2-3 billion EBITDA gap due to the rollout of the NBN - which sees Telstra hand over its copper network to the government - as one of the core drivers of the group restructure.

He also said Telstra needed "new and different skills" to support new technologies and services in the areas of digitisation, software, robotics, and artificial intelligence.

"This evolution of roles is not exclusive to Telstra or our industry – it is something that is happening worldwide and across almost all industries," he said.

Telstra would be a "leaner and more nimble organisation" as a result of the changes, Penn said. 

"All great companies have the capacity to manage periods of change and disruption and reinvent themselves as they go," he said.

"I recognise this will be difficult for some but please understand that we must make these changes to ensure we remain a great company in the future."

CWU "appalled"

The Communications Workers Union said it was "surprised " and "disappointed" by the restructure plans and Telstra's decision not to consult with the union.

It labelled Penn's announcement today an "ambush".

“Telstra has clearly prioritised the impact of this decision on their share price above the ethical obligation to speak with workers about their decision – the first we heard of it was in the news," CWU national secretary Greg Rayner said in a statement.

"[The] cost cutting exercise is not only devastating for the workers who will lose their jobs, but is also seriously concerning for [customers] who rely on Telstra’s operations."

Telstra is meeting the union at 2pm tomorrow.