Telecom ends jobs purge, looks for ‘more sophisticated’ ways to save money
By Paul McBeth
Aug. 23 (BusinessDesk) - Telecom Corp, which is undergoing a radical transformation into a data-driven and mobile-focused telecommunications operator, has finished a harsh round of job cuts, trimming its labour bill by an eighth, and is looking for “more sophisticated” ways to lower costs.
The Auckland-based company cut full-time employees by 16 percent to 6,622 as at June 30. Telecom now accounts for about 14 percent of the country’s 47,100 information, media and telecommunications staff in the June household labour force survey, down from about 17 percent of the workforce before it embarked on the cuts.
Chief financial officer Jolie Hudson told an analyst briefing today that job cuts are expected to result in net savings of $50 million on labour costs next financial year, and the phone company trimmed $98 million from its labour costs to $699 million in the 12 months ended June 30.
Those job cuts were signalled by chief executive Simon Moutter at the start of the year as he drags the telecommunications company into a new direction where it relies increasingly on mobile and data applications to derive revenue.
Moutter told today’s briefing the company is on track to crystallising between $100 million and $200 million in annual benefits from those initiatives.
“We do need to be more sophisticated from here,” Moutter said. “If we keep doing unsophisticated trimming, we’d start to break things in the business.”
Telecom is still looking at new ways to reduce its cost base across the wider business, and not simply on labour. The company set up a centralised team to reduce expenditure, which includes the return of former Wholesale and International boss Matt Crockett.
Moutter said the company needs to “return to revenue growth” and is putting greater emphasis on establishing new products and building market share, even at the cost of short-term profits, which he says will offer more potential for bigger earnings streams in the future.
The shares fell 0.9 percent to $2.23 today.