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http://www.theage.com.au/news/bu ... /1131951126885.html Australia's largest telco Telstra will cut 10,000 jobs over five years as part of a major restructure. New Telstra chief executive Sol Trujillo is today outlining plans for a massive overhaul of Telstra's operations, saying the telco needs to cut costs and grow revenue. Telstra plans to reduce the number of its 52,000 full time equivalent (FTE) positions by between 6,000 and 8,000 positions over three years and by 10,000 over five years. Most analysts had expected that Telstra would announce 9,000 job losses today, although some estimated that around 15,000 jobs would have to be cut. Mr Trujillo said Telstra's current business model would not get it where it wanted to go and it required a "new economic model". Earnings fall Telstra Corp Ltd says that provisions for redundancies in the 2005/06 financial year would increase the rate of earnings decline by between 25 per cent and 30 per cent. Telstra today updated the market on the outlook for its earnings in the current financial year, saying it expected earnings before interest and tax (EBIT) to fall between 19 per cent and 24 per cent as it implements it strategy to turn around the company. That forecasts includes the impact of rising deprecation charges on assets that will be decommissioned. However, if redundancy costs are included, the declines will be greater. "This new estimate will increase the decline to between 25 and 30 per cent if Telstra raised a provision for redundancy," the company said. Hong Kong deal Telstra confirmed speculation of a deal with Hong Kong mobile carrier New World Mobile Holdings Ltd. Under a memorandum of understanding signed with New World and its listed subsidiary New World Mobile Holdings Ltd, the mobile companies Hong Kong CSL Ltd and New World PCS Ltd will be merged. The merger proposal has Telstra owning 76.4 per cent of the equity in the combined business and New World Mobile Holdings owning the remaining 23.6 per cent. Telstra will also receive $HK244 million ($A42 million) in cash. Telstra currently operates the rival CSL cellular network in Hong Kong and combining the two carriers would make it Hong Kong's largest cellular carrier by subscribers, with about 2.65 million subscribers and annual turnover of $US770 million ($A1.05 billion). Regarding CSL, Mr Trujillo said Telstra would continue to build on its market leading position and use it as a potential longer term entry vehicle into China. He said Telstra wanted to grow the core business of its Sensis directories business. "We will protect and grow the core print yellow pages business ... but Sensis will become much more," he said. "We will continue to build on our market leading search and transaction business and transform it into the pre-eminent interactive applications and services business in Australia." Mr Trujillo is opening a five hour briefing with analysts and media to reveal the results of his four-month examination of the telco |
