By Himanshi Akhand and Adwitiya Srivastava
(Reuters) -Telstra will cut more than a tenth of its workforce by the end of 2024 and end its traditional annual inflation-linked price adjustments for mobile contracts, the Australian telecoms company said on Tuesday, as it struggles with fierce competition.
The country’s largest telecommunications company will cut up to 2,800 jobs from its corporate workforce as it looks to streamline its operations and cut costs as part of an overhaul of its network applications and services business.
Telstra (OTC:) had more than 31,000 employees in August 2023, according to its annual report.
The company said it expected to record one-time restructuring charges of A$200 million ($133.36 million) to A$250 million in fiscal 2024 and 2025.
The company is also updating the customer terms for its postpaid mobile plans to end the inflation-related annual price revision.
“We will not be making a CPI-related annual price change to postpaid mobile prices in July 2024,” said CEO Vicki Brady.
“This is happening in a dynamic environment, with an evolving competitive landscape, rapid technological advancements, changing customer needs and the ongoing inflationary pressures that all businesses face.”
“The removal of CPI-related price increases in the mobile sector is a surprise to us,” Jarden analysts said, adding that the move could be incrementally negative for mobile sector returns in the near term.
A starting point to cut 2,800 roles as part of an ongoing review is “clearly significant,” they noted.
Telstra also stated that by taking these steps, it hopes to reduce costs for T25 – an operating strategy the company adopted in 2021 – by A$350 million by the end of fiscal 2025.
The company reiterated its 2024 earnings forecast and said it expects 2025 underlying earnings before interest, taxes, depreciation and amortization to be between A$8.4 billion and $8.7 billion.
($1 = 1.4997 Australian dollars)
