Telstra to slash almost 10% of its enterprise division workforce by year-end

  • The majority of the cuts will take place by the end of this calendar year

  • The news of was not received well by the Australian Government

  • Telstra claims that these layoffs will help it reduce its annual losses by around $232.67 million

Australia’s largest service provider, Telstra, recently announced that it would be cutting 2,800 jobs from its fixed-line enterprise services division as part of the “reset” of this division. 

The company is planning to simplify the operations of the fixed-line Network Applications and Services (NAS) division, which will result in job cuts and help the company streamline its product portfolio. By the end of FY25, the company claims that these measures will help it reduce its annual losses by around AUS$350 million (USD$232.67 million). 

The majority of these job cuts will take place by the end of this calendar year. Consultation with the affected 377 employees is set to start immediately. Telstra has a workforce of around 31,000.

“In addition to starting the reset of Telstra Enterprise, we will reshape some of our internal operations,by moving our Global Business Services function into other parts of the business. This will help simplify processes and empower leaders closest to customers to make more decisions. We will also continue to focus on a range of actions to reduce non-labour and indirect labour costs,” said Telstra Chief Executive Officer, Vicky Brady, while announcing to Australia Stock Exchange (ASX). Telstra had 31

While announcing the job cuts, Brady acknowledged that they are “difficult but they are necessary."

"We need to be a more efficient and sustainable business to ensure we can continue to make the investments needed to support the ever-increasing growth in data volumes on our networks and deliver improved connectivity for customers across the country,” said Brady.

Enterprise segment takes a hit

Earlier this year, the company started reviewing its enterprise division after recording a steep drop-off in its NAS portfolio. The review covered all elements of its domestic business. This review is “ongoing,” and further updates will be provided during the August results. 

Elaborating on the job cuts in the NAS segment during the conference call, Brady said, “We do expect to really streamline our NAS portfolio of products, reducing it by two-thirds. And obviously, as we’re doing that, there’s the top and bottom line to consider. And, we want to make sure we are really focused on profitable NAS products and business. And that comes down to where we can differentiate.” 

The news of Telstra’s slashing jobs was not received well by the Australian Government. The country’s Treasurer Jim Chalmers said that the Government will test the claims made by Telstra. The Communication Workers Union also claimed that the job cuts would impact service delivery. 

One of the reasons to reset the enterprise business is to exit the legacy products and develop new-age products in line with the evolving needs of the customer.

“There’s a focus on exiting and migrating out of those legacy products onto growth products….so really focusing on those areas where we are advantaged,” said Michael Ackland, CFO, Telstra, during the conference call.

5G focus

Telcos are focusing on developing 5G and generative AI-based use cases to deepen their engagement with enterprise customers. For instance, Orange Business is investing in building infrastructure and capabilities for AI. This may explain Telstra’s need to move away from legacy products that were no longer serving the needs of the customers. 

Several other service providers have recently announced job cuts. For instance, Vodafone announced last year its plans to reduce its workforce by 11,000 over a period of three years. Similarly, BT is also targeting to bring down its employees by 55,000 by 2030.

One reason for a reduction in the workforce is the impact of artificial intelligence (AI) which is allowing telcos to enhance efficiency by using automation, making several employees redundant.

Keep up with what's happening in comms around the world here.