Telstra has announced a massive tranche of changes to the company's structure and operations. And while the news is really terrible for the 8000 employees who will see their jobs disappear, there's also the broader impact to the rest of the community. The vast majority of Telstra's phone and internet plans are set to be permanently "retired". Here's what this means for existing customers.
Despite the competition that comes from other businesses delivering internet services and mobile network providers offering mobile communications, Telstra is still a major force in every market it participates in. So, what will the changes that have been announced mean for customers?
Telstra is in a bit of a crisis mode. With its share price tumbling to a five-year low, a decline in mobile and fixed line revenues and ongoing issues with its network, it has become clear that a change is in order. That change came today, with Telstra CEO Andy Penn announcing the "Telstra2022" initiative.
In short, this is a major restructuring of the company that will see the creation of a new infrastructure business, a simplification of Telstra's product offerings and the axing of 8000 jobs. Here's what you need to know.
Telstra's CEO Andy Penn announced the changes in a blog post as well as during a shareholder meeting today. The new plan is based around four pillars. These are:
- Radically simplify our product offerings, eliminate customer pain points and create all digital experiences
- Establish standalone infrastructure business to drive performance and set up optionality post the nbn rollout
- Greatly simplify our structure and ways of working to empower our people and serve our customers
- Industry leading cost reduction programme and portfolio management
Some of these changes have been a long time coming. For example, the establishment of a separate infrastructure business should have happened back in 1997 when the company was first sold off via the sharemarket. For a long time customers suffered as a result of the close relationship between Telstra's infrastructure, wholesale and retail business units; a level of cooperation that made it hard for third parties to compete in many sectors.
One of the real benefits for customers will come, if the plan goes ahead as Penn outlined, through a massive simplification of the company's product offerings.
For example, the plan is for the existing 1800 consumer and small business plans to reduce to just 20. Anyone who's stepped into a Telstra store in search of a plan will know the pain of trying to figure out what their best option is. This simplification will not only be good for customers but also the market as it will make it easier for customers to compare what Telstra offers with other providers.
For business customers that also means some legacy products that are expensive to maintain and support will disappear. The company expects to will move half their customers to new technology stacks over the next three years. If you're a Telstra business customer using their cloud or other technology services, get ready for some changes.
There will also be an increased use of digital sales channels so procurement processes will need to change as well.
One of the other benefits from the simplification of structures within Telstra is an expected reduction in the number of support calls we need to make, with Penn forecasting a drop of around 33 per cent.
Making the network more secure was also mentioned. Some of the 1500 new roles being created will be focused on cybersecurity as well as information management and software engineering.
Telstra has been through major transitions before. Those with a few grey hairs will remember that Telstra was once called Telecom and before that was a department of the Post Master General, back when the telco was part of the post office.
There was also the merger with the Overseas Telecommunications business (OTC) that brought international calls into the same business as landlines. We've had the arrival of mobile and the internet more recently and, frankly, each change has been bolted onto a business that was designed in a different age.
So, the news today has been a long time coming. But it will bring pain. 8000 people will be looking for new jobs soon - although the company is promising to spend $50M on helping them transition to new roles. Telstra customers, meanwhile, will face an uncertain period as they transition from existing arrangements to new ones.
With that said, Telstra has set itself a 2022 deadline to complete the restructuring of the business: even if you're on a 24-month contract, there should be plenty of time to negotiate a new plan or shop elsewhere without repercussions. If you're keen to switch now, you can find some current options here.