COMMENT: 1,400 Telstra Staff Sacked But What About Future Revenues & Stopping The Rot
Telstra’s decision to sack 1,400 people was not unexpected as this is a Company that is desperate to cut costs, because sales of their technology offering are being taken by other providers, who are delivering superior service and are trusted by both business and consumers, more so than Telstra, at the same time consumers are migrating away from the carrier due to poor service from their Philippines based customer service operation.
CEO Andy Penn has done a lot to spin around his problems during COVID-19, he has tried talking up 5G despite the bulk of Australia still without access to the new communication experience. He is losing share in the broadband market while retailers such as JB Hi Fi who are now Telstra’s biggest retail partner are stripping handset sales away from the carrier who is believed to be paying the Melbourne based retailer over $30M a year.
Yesterday Penn outlined the job cuts in an email to Telstra staff claiming the cuts would have taken place last year had the pandemic not hit.
Even so major Australian businesses are expected to face political heat for widespread job cuts while the economy is in a recovery phase. On Tuesday Penn handed over to Foxtel an organisation that the carrier has a 35% shareholding their sports streaming business, five years ago we were being told that Telstra was set to be a major player in the streaming market however this has not eventuated and insiders at News Corp would rather not have Telstra hanging around as they have failed to deliver any major contributions to the success of the Foxtel operation that is now growing streaming subscribers.
In the business market Telstra has failed to be a serious player in the cloud-based market despite relationships with the likes of Microsoft. One only has to talk to their b2b partners to realise that Telstra is seen as more of a hinderance than a value partner.
One key Sydney partner said that they are “fed up” of the staff churn at Telstra especially among senior management.
In yesterday’s email Penn said, “We expect to be more than 90 per cent through our T22 commitment to reduce our overall workforce by 8,000 net roles by 30 June 2021 and have completed or nearly finished by the end of this calendar year.”
However, he has failed time and time again to address the issue of where Telstra growth is going to come from especially as the likes of Vodafone and TPG are now ramping up their marketing resources a move that could see further business stripped from Telstra.
Also impacting the business and their retail partners is a move by smartphone makers to sell direct avoiding the rebate and marketing demands that Telstra and retailers have placed on them in the past. Brands such as Samsung Motorola and Apple have witnessed a significant lift in direct online sales during COVID-19.
If 1,400 sackings Telstra is expecting to make another 800 reductions mostly by the end of this calendar year.
Finally, management have woken up to the fact that Australian customers are fed up with script reading customer service personnel in the Philippines who often don’t have a clue and are powerless to address issues that they don’t have a prepared script for.
The CEPU Communications Union representing Telstra employees said customers would bear the brunt of the cuts. Union national president Shane Murphy last night urged Telstra to reconsider the cuts which he said included roles in rural and regional areas.
“While Telstra continues to cut staff, it‘s the workers and customers who are bearing the brunt of it,” he told The Australian.
Penn in his email said that Telstra would not deliver their new Australian call centre until 2022.
Mr Penn said that by the end of 2021, Telstra expected to “align” all of its staff across four main employment groups.
The carrier has targeted $1bn in cost cutting to be completed by the 2022 financial year.
The three operational groups will be Telstra Group – InfraCo Fixed will own physical infrastructure assets, InfraCo Towers will own tower assets and ServeCo will focus on service delivery.
Several former management claim that Penn is struggling to grow Telstra and that they would welcome the return of David Thodey the former CEO to run the business. All Penn wants to do is “look after shareholders”.