Layoff Plan and Price Adjustment
According to reports, Australian telecommunications company Telstra will cut more than one-tenth of its workforce by the end of 2024 and halt its traditional annual inflation-adjusted mobile plan pricing. Facing fierce competition, the company plans to reduce up to 2,800 positions in its enterprise division, aiming to streamline operations and reduce costs as part of a review of its network applications and services business.
Layoff and Restructuring Costs
As of August 2023, Telstra disclosed in its annual report that its total workforce exceeds 31,000. The company anticipates recording one-time restructuring costs of AUD 200 million (approximately USD 133 million) to AUD 250 million in the 2024 and 2025 fiscal years. This move is viewed as an effort to reduce costs as part of the T25 operational strategy, which was implemented in 2021 with the goal of saving AUD 350 million by the end of the 2025 fiscal year.
Elimination of CPI-Linked Price Adjustments
In addition, Telstra has updated its customer terms to eliminate annual price adjustments linked to inflation. CEO Vicki Brady stated: “We will not apply an annual price adjustment linked to the Consumer Price Index on post-paid mobile prices in July 2024.” This measure is taken in a dynamic environment, facing ever-changing competitive landscapes, rapid technological advancements, shifting customer demands, and the ongoing inflation pressures faced by all businesses.
Analysts at Jarden believe that eliminating CPI-linked price adjustments may negatively impact short-term returns for the mobile industry. They noted that the reduction of 2,800 positions is “significant” as part of the ongoing review. Telstra reiterated its 2024 earnings forecast and expects its underlying EBITDA in 2025 to be between AUD 8.4 billion and AUD 8.7 billion.
