Telstra Chief Executive Officer Andy Penn
Telstra Chief Executive Officer Andy Penn speaks during a news conference with Ericsson at the Mobile World Congress in Barcelona, Spain February 26, 2018. Reuters/Yves Herman

Telstra is axing thousands of employees as it announces a new strategy called Telstra2022 on Wednesday. Australia’s largest telco said the reduction will also include two to four layers of management to “flatten the structure.” All these and more are part of the $1 billion cost-cutting strategy.

The Telstra2022 will see about 8,000 employees and contractors losing their jobs, while two to four layers of management also being reduced. The strategy aims to simplify the company’s structure while reducing costs and improving customer experience.

CEO Andrew Penn said the strategy would “fundamentally change the nature of telecommunication products and services in Australia” while making customer experience as pain-free as possible.

“We will take a bolder stance and use the disruption in the telecommunications industry to lead the market for the benefit of our customers, employees and shareholders,” he said in a statement. “The rate and pace of change in our industry is increasingly driven by technological innovation and competition. In this environment traditional companies that do not respond are most at risk. We have worked hard preparing Telstra for this market dynamic while ensuring we did not act precipitously. However, we are now at a tipping point where we must act more boldly if we are to continue to be the nation’s leading telecommunications company.”

The reduction of workforce will be implemented over the next three years, with the initial focus on the reduction of executive and management roles and less on the customer-facing staff. Telstra will also hire about 1,500 new jobs to build “new capabilities required for the future.”

Telstra2022 has four key pillars, namely:

  • Radical simplification of Telstra’s product offerings, elimination of customer pain pains and the creation of all digital experiences;
  • Development of a standalone infrastructure business;
  • Simplification of the company’s structure and ways of working to “empower our people and serve our customers”; and
  • Industry leading cost-reduction program and portfolio management

The announcement has sent the company’s shares to a seven-year low, dropping $2.70 on the ASX.