The good news for chief executive Vicki Brady is that the mobile division continues to motor on nicely. She needs this motor to purr like a kitten.
Telstra’s decision to cut almost 10 per cent of its workforce might be the headline grabber, but why it needs to cut this deep is what shareholders should be focusing on.
It seems Telstra took the view that this across-the-board annual CPI-linked price change was a blunt marketing tool, and it would rather have the flexibility to charge more to those customers prepared to pay up big for a premium network and less to more price-sensitive customers. It is a sad but historical reality that companies under pressure to cut costs will wield the axe at the low-hanging fruit – which, in most cases, are labour costs.
The division has become increasingly vulnerable to businesses moving to internet-based services provided by software companies rather than using traditional voice calls.This is now clearly a structural problem for telecommunication companies and needs to be addressed.
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