'The impact of this on Telstra is profound': CEO Andy Penn says NBN to blame for the telco's job cuts

Photo: Getty Images

Telstra chief executive Andy Penn blames his company's plan to sack a quarter of its employees on the NBN, saying the government-owned fibre network eventually would take up to half the telco's earnings.

Speaking on the future of work at an event hosted by the Committee for the Economic Development of Australia, Mr Penn said the National Broadband Network was profoundly affecting Telstra's bottom line and it was unrealistic to expect Telstra to retain the same staffing level.

"The NBN re-nationalises Australia's fixed broadband network and this means Telstra is no longer the main wholesaler provider of this, as it had been since privatisation," Mr Penn said.

"The impact of this on Telstra is profound – it means we lose between one-third and half of our earnings. You cannot take away a material part of a company's business and earnings and expect it to carry on with the same strategy and the same workforce.

"It is hardly surprising therefore that at Telstra we are reducing our workforce by 8000 roles, around a quarter of our team. NBN Co, which is becoming the provider of wholesale fixed-broadband services in Australia, now employs almost 7000 people directly and has a field force of 24,000, many of them former Telstra employees.

"I am sure this point is not lost on you. NBN combined with a changing marketplace and the broader opportunities created by the fourth industrial revolution I have outlined have meant we must restructure for the future. Our plan to do that is called T22."

The T22 will see 9500 staff made redundant and about 1500 roles created, bringing net job cuts to 8500 by 2022. It also involves a major management restructure, taking out several layers of management and shifting to the "agile" management style.

Fierce competition for skills

Telstra CEO Andy Penn. (Robert Prezioso/Getty Images).

While Telstra has said it would aim to offer the new roles to existing staff, Mr Penn said on Wednesday that many of the new recruits would need to be found overseas, because there were "simply not enough" people with the right skills in Australia.

"We are also competing for these skills domestically with other Australian organisations, including some of you in the room here today," Mr Penn said.

"That competition is fierce and it is estimated Australia will have a shortfall of 60,000 skilled workers in the ICT sector in the next five years.

"That means we are having to recruit some of those capabilities on the global market, including in places like India. Given our urgent need, Telstra will be creating a new Telstra Innovation and Capability Centre in Bangalore, which will become operational later this year.

"Bangalore is India's 'Silicon Valley' and even there we are competing for talent with the likes of Apple, Google and other digital companies," he said.

He called for immigration policy to focus on attracting people with the right skills to Australia.

Last week Telstra announced it was making 752 staff redundant, in the second major round of sackings since the announcement of the T22 plan last June. Unions representing Telstra staff are negotiating the telco's new enterprise bargaining agreement and are pushing for easier access to voluntary redundancy.

It is understood Telstra is resisting this because it would remove control over which people it can make redundant.

This article was originally published by the Australian Financial Review. Read the original article here or follow the AFR on Facebook.

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