Telstra to establish infrastructure division

20 Jun 2018

Australia's largest operator Telstra has announced plans to eliminate 8,000 jobs and establish a standalone infrastructure business as part of a broad-based restructuring strategy.

The operator plans to simplify its operations by reducing up to four layers of management, implementing a streamlined operating model and realigning ways of working to increase a focus on best serving customers.

Meanwhile Telstra plans to simplify its product offerings by replacing all of its more than 1,800 consumer and small business plans with 20 core plans backed by the delivery of services from digital platforms.

On the enterprise side, Telstra plans to reduce its product portfolio by more than half within three years, with a greater focus on the delivery of digital-first services supported by software platforms and the IoT.

A new wholly-owned infrastructure business unit called Telstra InfraCo will also be established, which will operate Telstra's fixed network infrastructure including data centers, non-mobile backhaul related domestic fiber, copper, hybrid fiber coaxial (HFC), subsea cables and other assets.

Telstra InfraCo will sell its services to Telstra, wholesale providers and NBN Co, the state-owned company operating the National Broadband Network.

It will also provide the option for Telstra to potentially demerge or take on a strategic investor for its infrastructure assets after the NBN rollout is complete.

Finally, Telstra has announced plans to monetize assets of up to A$2 billion ($2.71 billion) over the next two years to strengthen its balance sheet and reduce underlying core fixed costs by A$2.5 billion by 2022.

“The Australian telco market is entering an extremely challenging period driven by a number of factors including the nbn transition and increased mobile competition. We are seeing this play out in our financial performance and therefore the impact on the economics of the company are very significant,” Telstra CEO Andrew Penn said.

“We are committed to leading the market in a period of transition and positioning ourselves to create a strong platform for growth. At its core, this strategy is about placing customers at the center of everything we do and delivering simpler, more flexible products with a beautiful digital service experience.”

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