Telstra slashes customer product offering; cuts 8000 staff

ASX-listed telco announces a major overhaul of its business model with plans to drop 1800 product offerings down to 20 and remove thousands of jobs from the organisation

Telstra is cutting 8000 staff and contractors, slashing customer plans and pricing and creating a new infrastructure business unit in a strategy shake-up it claims will simplify structure and cut costs while improving customer experience.

In a statement to the ASX today, the company unveiled its new Telstra2022 strategy, based around four main priorities. The first is drastically reducing product offerings from 1800 to 20, a move aimed at eliminating customer pain points and creating all digital experiences, Telstra CEO, Andrew Penn, said.

The telco is also creating a standalone infrastructure business unit, InfraCo, for its traditional fixed-line assets, paving the way for a demerger or new strategic investment following the completion of Australia’s National Broadband Network (NBN). The new division will control assets worth about $11 billion with annual revenues of $5.5 billion.

On top of this, Telstra said it’s working to simplify its structure and ways of working in a bid to empower people and better serve customers. The fourth pillar is a cost reduction program and portfolio management overhaul.

The decision will see 8000 employees and contractors cut from Telstra’s books over three years, and a reduction in up to four layers of management, the company stated. There is a strong focus on executive roles initially, and no bias will be shown towards offshore or onshore, regional or metro, Penn said during a live interview on ABC news this morning.

To support this, Telstra has outlined a $600m restructuring provision to support the changes needed to be made, on top of its $50m transition program. In addition, the company expects the increase of its productivity program will rise by $1 billion to $2.5 billion cost out by FY2022.

Penn claimed the strategy will fundamentally change the nature of telecommunications products and services in Australia.

“As an industry, we’re at a tipping point; the nature of telecommunications is unsustainable, and it has to change. Telstra is going to lead that change,” Penn said, noting the rate and pace of change is increasingly being driven by technological innovation and competition and companies must respond and adapt accordingly.

Radically cutting the product offerings and restructuring is about dealing with all the complications, frustrations and complexity that exists in telecommunications today, Penn continued. He pointed out there are $500m in charges and costs for customers being given away in terms of service revenue under the changes.

“If we can fundamentally change that and disrupt ourselves, we will change the experience for customers,” Penn said. “What we are constantly doing is dealing with issues and complications we’ve created for customers because of the way we designed the products.”

Telstra expects customers will start to benefit from these changes in July when it launches ‘peace of mind’ data across new post-paid plans to remove excess data charges. Four major product and service experiences will then be announced between now and June 2019, and all customers will be moved to the new product range by 30 June 2021.

Telstra added the lost revenue should be offset by more services per customer and lower costs from a more simplified business model.

On the B2B front, Telstra also plans to at least halve the existing product portfolio in the next three years and said the emphasis will be on digital-first, software-based platforms and better leverage of the Internet of Things. This will be possible because of the new tech stack for mid-market and enterprise customers built over the past year, the company stated.

In a statement, Penn further said he and the executive team have been working hard preparing Telstra for this new market dynamic while not “acting precipitously”.

Telstra has been experiencing a rapid decline in its share price over the past year on top of a string of embarrassing and highly frustrating network outages nationally, the most recent in May effecting millions of customers. At the same time, the traditional fixed line business model is being disrupted off the back of the NBN rollout, while the mobile network is being challenged by aggressive investments from rivals such as Vodafone, Optus and TPG.

In its announcement, Telstra also flagged its ongoing investment in 5G, the next-generation mobile network technology.

More Telstra stories from CMO:

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu    

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

More Videos

More Brand Posts

What are Chris Riddell's qualifications to talk about technology? What are the awards that Chris Riddell has won? I cannot seem to find ...

Tareq

Digital disruption isn’t disruption anymore: Why it’s time to refocus your business

Read more

Enterprisetalk

Mark

CMO's top 10 martech stories for the week - 9 June

Read more

Great e-commerce article!

Vadim Frost

CMO’s State of CX Leadership 2022 report finds the CX striving to align to business outcomes

Read more

Are you searching something related to Lottery and Lottery App then Agnito Technologies can be a help for you Agnito comes out as a true ...

jackson13

The Lottery Office CEO details journey into next-gen cross-channel campaign orchestration

Read more

Thorough testing and quality assurance are required for a bug-free Lottery Platform. I'm looking forward to dependability.

Ella Hall

The Lottery Office CEO details journey into next-gen cross-channel campaign orchestration

Read more

Blog Posts

Marketing prowess versus the enigma of the metaverse

Flash back to the classic film, Willy Wonka and the Chocolate Factory. Television-obsessed Mike insists on becoming the first person to be ‘sent by Wonkavision’, dematerialising on one end, pixel by pixel, and materialising in another space. His cinematic dreams are realised thanks to rash decisions as he is shrunken down to fit the digital universe, followed by a trip to the taffy puller to return to normal size.

Liz Miller

VP, Constellation Research

Why Excellent Leadership Begins with Vertical Growth

Why is it there is no shortage of leadership development materials, yet outstanding leadership is so rare? Despite having access to so many leadership principles, tools, systems and processes, why is it so hard to develop and improve as a leader?

Michael Bunting

Author, leadership expert

More than money talks in sports sponsorship

As a nation united by sport, brands are beginning to learn money alone won’t talk without aligned values and action. If recent events with major leagues and their players have shown us anything, it’s the next generation of athletes are standing by what they believe in – and they won’t let their values be superseded by money.

Simone Waugh

Managing Director, Publicis Queensland

Sign in