Telstra Corp. plans to cut 8,000 jobs, sell assets and potentially spin off a new infrastructure business in a make-or-break attempt to fend off competition. The stock tumbled.
Australia’s former phone monopoly, which has lost more than half its market value since early 2015, said it will almost double its cost-cutting programme. An asset carve-off will raise as much as to A$2 billion, and one in four executive and middle management roles will go over the the next three years.
“We are now at a tipping point,” Chief Executive Officer Andrew Penn said.
“We must act more boldly. Our legacy is now holding us back.”
Under pressure to change course as Telstra’s stock price and earnings dwindle, Penn said Australia’s largest telecommunications company will undergo a “radical simplification.” More than 1,800 consumer and small-business products will be distilled into just 20, helping to eliminate two thirds of customer-service calls by 2022.
Telstra has lost out to smaller rivals after its high-margin, fixed-line access business migrated to a state-run network, and mobile-phone competitors lured customers away with cheaper offerings.
The Melbourne-based company had its debt downgraded for the first time in 12 years last month by S&P Global Ratings, which cited its vulnerability to price and market-share erosion.