Telstra gets set to cut 10,000 contractors

At least 10,000 Telstra contractors are expected to be cut over the next two years as part of the telco’s far-reaching T22 transformation program, according to the company’s CEO Andy Penn.

“By June 30 we expect to have announced around 75 percent of our direct workforce reductions,” Penn said at a Morgan Stanley Summit on 4 June. “Over the past year we have also reduced our indirect workforce by 5,000 and we would anticipate reducing this further by over 25 percent in the next two years.”

Telstra’s T22 strategy is aimed at improving the telco’s underlying earnings in an increasingly dynamic, competitive market and, in large part, mitigating the impact to the telco of the National Broadband Network (NBN) rollout.

When the T22 strategy was first announced in June last year, the company flagged it would result in 9,500 total job losses in addition to 1,500 new jobs created, leading to a net reduction of roughly 8,000 direct employees and contractors over the following three years.

In February this year, when Telstra announced its results for the six months ending December 2018, Penn updated shareholders on the company’s T22 progress, noting that, in addition to the culling of roughly 8,000 employees, the 40,000-strong workforce of Telstra’s industry partners that provide a range of services would also be affected.

“We are also continuing to target non-direct labour,” Penn said at the time. “This includes some of our indirect workforce. Our industry partners who provide technology, consultancy and other services have a workforce of approximately 40,000 supporting Telstra.

“As we simplify our business and optimise costs, we expect the total number of people our partners employ to work on our business to decline. The indirect workforce is also expected to decline as a proportion of our overall workforce,” he said.

As reported by the Australian Financial Review on 4 June, Penn’s latest estimate regarding Telstra’s indirect workforce equates to an expected cull of at least 10,000 contractors, with the telco looking at reducing its total direct and indirect workforce by close to 20,000 roles by 2022.

However, Penn has readily acknowledged potential impact on workers, both direct and indirect, flagging that the company has put some effort into providing support for affected workers.

“The human dimension of these numbers is very challenging.  That is why we have an extensive program of support in place,” Penn said at the Morgan Stanley Summit.

Telstra eyes 5G opportunities beyond mere connectivity supply

Telstra CEO Andy Penn has talked up some specific benefits and opportunities around the imminent rollout of 5G, beyond merely focusing on the telcos traditional remit of delivering connectivity and bandwidth capacity.

At Telstra’s recent Vantage tech even in Melbourne, Penn told media that as the connectivity piece itself drives a host of technology innovations, the enterprise side of business will be clamouring for more capacity, volume and connectivity.

“Of course, for Telstra, [the] strategy has always been as well to see how we can create value, not just from the connectivity, but from the application and services that are enabled by the connectivity,” Penn said.

Penn emphasised that while Telstra had been cultivating this particular enterprise focus quite successfully to date, associated opportunities to push ahead along this track once the commercial 5G deployment got underway would be even greater.

“We need to think about how do we achieve that on the small-medium business side, and also into consumer as well; I think that would be an opportunity,” he said.

But I mean the 5G business case stands up on its own, just to meet the demand and growth for data that is coming forward in the future,” Penn continued. “And if you if you do the math and you multiply out 40% growth per annum for the next four or five years, you rapidly get to four or five times the volume of data in the future that we’ve got to build the capacity for.”

“5G will deliver that capacity at a lower cost per byte of data, and so it will be far more efficient than continuing to build capacity in 4G,” said Penn.

Richard van der Draay was in Melbourne as a guest of Telstra

Speed, capacity and IoT will cement 5G’s key role in 4th industrial revolution: Telstra CEO Andy Penn

Telstra CEO Andy Penn has outlined an upbeat assessment of how the rollout of 5G in conjunction with vastly increased network speed, capacity and the opportunities of the Internet-of-Things looks set to be a pivotal driver of the digitisation of the physical world and mass automation.

Unpacking some of the key elements of this disruptive transformation – the Fourth industrial revolution – at Telstra’s 2018 Vantage tech event in Melbourne, Penn classed the continued increase in compute power, and the lowering of the cost of availability of compute power as pivotal.

“More compute power is available in the hands of a couple of entrepreneurs in their garage today, for probably A$20 an hour, than there was 15 years ago in some of the major computer servers that were supporting Google’s world-wide network of Search,” he said.

“I get really geeky and excited about this sort of stuff because the extent of telecommunications innovation has been incredible. And it has needed to be as we meet the continual growth and demand for data and connectivity,” said Penn. “And we are now on the cusp of a major further development in telecommunications technology, and that’s 5G.”

However, Penn emphasised it won’t not be  5G on its own which will be the defining creative force behind the digital transformation. “It is 5G in conjunction with these other developments,” he said, adding “as you bring all of these things together, that is what is going to engage and create this incredible transformation.”

Delving deeper, Penn said there were three things  5G would be able to achieve in a different manner than previous forms of technology.

“The first is speed,” he said. “And the reason that that’s important is, as we move into a world of automation and robotics, whilst we can put up maybe with that slight annoying delay in relation to communications when it perhaps is voice, or perhaps we’re accessing a website, when it comes to things like autonomous driving, that latency sort of starts to become important.”

“When it comes to robotics, it becomes important as well,” he added. “One area where robotics is playing a critical role today is actually in health care.”

Secondly, Penn said capacity would prove to be another key reason why 5G would be a different proposition. “It’s one thing to be fast – we all know that when we get on the freeway, that’s great because we can generally get to our destination a little bit quicker. But if there’s 10,000 cars in front of us, good luck.”

“That’s called a capacity problem,” Penn said. “So we need to solve for both when it comes to mobile telecommunications and 5G is doing exactly that with 10 times the capacity of previous technologies, at a lower cost per gigabyte of data.”

Finally, Penn said the last reason 5G will be different is related to the concept of the Internet-of-Things.

“Previous mobile networks have been designed, essentially, to connect handsets, mobile phones, and tablets. The 5G is designed to also connect the billions of sensors and other pieces of equipment that will be attached in the future in the world of the Internet-of-Things,” he added.

“We’ve just been doing work with Linfox, as an example, where we’re putting telematics into all of their trucks on road to measure such things as the driver experience, what’s actually happening within the truck, what’s actually happening with the freight that’s being forwarded at the same time.”

“And this whole world will be clearly enabled by 5G,” Penn said. “5G is going to be transformational from a technology perspective in telecommunications. And in conjunction with those other technology innovations – with the increasing compute power, these connected devices which are producing masses of data, with Artificial Intelligence – it will lead to the physical world becoming infused with the digital world and it will lead to incredible automation.”

 

Telstra flicks switch on 5G mobile network service for Queensland’s Gold Coast

Telstra has switched on 5G technology across selected areas of the Gold Coast in Queensland, claiming the move made the telco’s mobile network the first in Australia to be 5G ready.

Telstra CEO Andrew Penn said this was just the beginning of Telstra’s rollout of 5G technology, with some 200 5G-capable sites planned to be live around the country by year’s end.

“Today’s switch on demonstrates Telstra’s commitment to mobile leadership in Australia and will support the ongoing testing of next generation mobile technologies in Australian conditions to support the early commercial deployment of 5G mobile services,” Penn said.

“Telstra has already achieved a number of significant milestones in preparation for 5G. In February we launched Telstra’s 5G Innovation Centre on the Gold Coast which has since been home to several world and Australian firsts including the world’s first precinct of 5G-enabled WiFi hotspots, Australia’s first 5G Connected Car, and the world’s first end-to-end 5G non-standalone data call on a commercial mobile network,” he added.

“Today we have switched on 5G-capable sites on the Gold Coast, enabling us to test 5G precommercial devices in real world conditions and use unique innovations like our Connected Car to test our 5G footprint,” Penn explained. “It also means we can connect compatible commercial 5G devices for customers in 5G areas as they become available.”

Penn said mobility wa key for the telco’s customers. “That’s why we are focussed on delivering a 5G mobile service first and foremost. Over the coming months we will continue expanding our 5G coverage with plans to roll out to more capital cities, regional centres and other high demand areas,” he said.

Telstra is planning a 5G mobile service that will be able to support both sub 6GHz and mmWave spectrum in the future. The sites it has turned on using the licensed 3.6GHz spectrum are connected to Telstra’s new modernised production core network which virtualises the various wireless network functions onto common data centre compute hardware.

The firm’s 5G deployment is underpinned by around A$5 billion in mobile network investment over the three years to 30 June 2019, which it noted is consistent with previous guidance, to improve the capacity, capability and reach of the mobile network.

Penn said Telstra’s ongoing network investments were critical as it prepared to lead the market and win in 5G.

“Our… strategy will be underpinned by our aim to have the largest, fastest, safest, smartest and most reliable next generation network, and these ongoing investments will ensure we continue to deliver market leading innovation in networks,” Penn said.

 

Transforming how we work: Telstra CEO Andy Penn

Today we have announced fundamental changes to Telstra’s organisational structure and operating model. Part of our T22 strategy, these are about building a company agile and nimble enough to respond quickly to rapidly changing market dynamics and opportunities. To do that we need to change how we work. I wanted to share the note I sent to employees today because I want to keep being as transparent as possible about what we are doing and what that means for our customers and employees.

Good morning,

Today we are announcing a new topline organisational structure and leadership team as well as the first components of a new operating model effective 1 October 2018.

These are important steps to help us deliver our new T22 strategy and incorporate the feedback from many of you about the impediments and pain points which get in the way of us executing.

As I said when we launched the T22 strategy last month, our size and legacy that served us so well in the past are now getting in the way of what we need to be today and in the future, given market dynamics and the rapidly changing needs of our customers.

We must act now to ensure we deliver rapidly and effectively on all of the commitments we made to our customers, the market and to you, our team.

So today we are announcing a simpler, more streamlined structure which will remove duplication, hierarchy and silos across the organisation. This will help us move more quickly and effectively deliver on the T22 strategy.

At the heart of these changes is the simplification of our products and services built on new technology. By mid-next year we will have fully rolled out our market leading products and services. To help deliver these changes, we are announcing a new end-to-end Product & Technology division of Telstra. It means we will significantly increase our technical capabilities around product development and management.

The changes I am announcing today will ensure we continue to deliver market leading innovation in networks and support the build out of 5G and Internet of Things.

From 1 October we will shift to the new structure and operating model, under a single strategy, with our plan on a page and its shared goals for the leadership team.

Today we have also announced changes to the Group Executive team.

Our new structure and Group Executive team enabling our shift

*Product & Technology will drive an integrated product and technology roadmap for all of Telstra to deliver innovative and simple product experiences that lead the market and drive profitable growth. An external appointment has been made for this Group Executive role and the person will be announced shortly.

*Michael Ebeid joins Telstra to run the Enterprise team servicing Australian and international business and government customers with market-leading solutions and services. Michael will start at Telstra on 8 October.

*Vicki Brady will continue to lead Consumer & Small Business designing digitally-led propositions for customers, managing customer relationships with superior sales and services capabilities, to acquire new customers and grow Telstra’s base.

*Nikos Katinakis joins Telstra in mid-October to lead Networks & IT focused on extending the company’s network superiority and enabling digital experiences with world-leading technology execution.

*Brendon Riley will become the CEO of Telstra InfraCo which will efficiently leverage the InfraCo assets and drive growth in the Wholesale market, whilst creating future strategic optionality for these highly valuable assets.

*David Burns, currently with the Enterprise team, will lead Global Business Services (GBS) to bring together and radically simplify customer service operations and internal support services. GBS will drive a consistent approach to customer experience, efficiency and service levels. David’s appointment is effective today.

*Robyn Denholm will move to the role of Chief Financial Officer & Head of Strategy. She will support the CEO to drive the company’s overall strategy, deliver long term shareholder value growth and continue to lead our digitization initiative for FY19.

*Alex Badenoch, Transformation & People will lead the T22 strategy transformation execution as well as drive the way the company works and operates, strengthening employee engagement. A Transformation Delivery Office has also been established to deliver an integrated and disciplined approach to implementation.

*Carmel Mulhern, Legal & Corporate Affairs will continue in her role engaging external stakeholders, including relationships with government, regulators, media and the community. Carmel will also continue to hold the office of Group General Counsel and manage the internal provision of legal advice and employee communications.

I am excited Michael Ebeid and Nikos Katinakis are joining the Telstra team. Both bring with them significant experience across a range of industries, including telecommunications, and will be instrumental in Telstra’s transformation.

Michael was most recently CEO and Managing Director of SBS where he has significantly evolved the public broadcaster’s portfolio and led a continuous focus on driving efficiencies and a high-performance culture. He also spent 10 years at Optus, which included being a senior executive in their Enterprise and Government division.

Nikos was most recently Executive Vice President Networks for Reliance Jio in India, where he was responsible for rolling out the first pan-India 4G LTE Network. Prior to leaving Jio, he led their Wireline/fixed consumer business, and before this held senior leadership positions at Canada’s Rogers Communications and Ericsson.

More detail including the functions that sit within these areas and the type of work they will be responsible for is available on the Strategy Hub.

It is with sadness that I announce Warwick Bray, Stephen Elop, Will Irving and Joe Pollard will leave Telstra.

Warwick has been Chief Financial Officer since 2015 where he brought to the role great insight and support for me. He has also previously led our Corporate Strategy group and our mobiles business successfully where he grew our mobile market share by 10 percentage points, achieved double digit revenue growth and improved margin by over $1 billion pa and more than 10 percentage points, delivering industry leading growth. As CFO, he led the delivery of approximately $700 million pa in core fixed cost reduction, introduction of a new capital management framework and driven insight into Telstra’s financial performance through NBN structural change.

Warwick will leave Telstra on 30 September.

Stephen has been instrumental in guiding our corporate strategy and building our technology credentials since he joined us in April 2016. He played a key role in bringing together our Chief Technology Office and Corporate Strategy groups so we were better placed to begin the significant shift from an incumbent Australian telco to a company able to boldly face global technology disruption.

Stephen will be finishing in his full time executive capacity at Telstra tomorrow but will continue to maintain a close relationship with the business.

Will joined Telstra in 1997 and held a variety of legal roles prior to becoming Group General Counsel in 2005. Following the T3 Telstra privatization he was named the 2006 Australian Corporate Lawyer of the Year. He also played a key role in Telstra’s $11 billion NBN deal in 2011, immediately after which he became the Group Managing Director for Telstra Business. From 2011 to 2016 he grew its market share and its NAS business very significantly. He was appointed as GE Telstra Wholesale in 2016 and has recently led the work developing Telstra InfraCo. Will’s last day at Telstra will be 30 September.

Joe joined Telstra in 2014 initially as Group Managing Director Marketing and Media before becoming Chief Marketing Officer and Group Executive Media the following year. She has been instrumental in evolving our brand and the experience we provide customers including through the Brand 3.0 work she led. Joe has also been responsible for building Telstra’s extensive portfolio of digitally enabled media assets.

Joe will leave Telstra on 30 August. From this time, Jeremy Nicholas will be acting GE until 1 October as we integrate the Media and Marketing teams into the broader end-to-end structure and operating model.

I would like to recognise the significant contributions Warwick, Will, Stephen and Joe have made to Telstra and thank them for their dedication to Telstra collectively over the years. We will arrange appropriate farewells in coming weeks.

Sharing the roadmap for organisational and operating model changes across our multi-year program

Our changes in structure, new ways of working and our operating model will be delivered through a multi-year transformation program with our new structure and operating model to take effect from 1 October.

To drive the execution of T22, a Transformation Delivery Office in Transformation & People will deliver an integrated and disciplined approach to implementation. Our roadmap provides more information on initial timings for T22.

The next phase in our organisational and operating roadmap will be the announcement of the leadership structures and executive appointments under the GEs. This is expected in mid-August.

As this is a multi-year transformation program, teams will be impacted at different times and to varying degrees. As I have previously said, in the first year the majority of reductions will come from our executive, middle management and back of house functions with a view to minimising the impact on our front of house workforce to maintain focus on the customer experience.

Outside of CEOLT, there are no individual role impacts being announced today as part of T22.

Throughout Q1, there will continue to be role reductions proposed in local teams due to business reasons unrelated to the new T22 structure and operating model. These job proposals are part of the net reduction of approximately 8,000 employees and contractors.

I am conscious this is a large amount of change and that can be unsettling for our people.

We will continue to provide ample check-ins and opportunities to provide feedback and I will continue to be available at least once a week including through yam jams, town halls and livestreams. Please also reach out on Yammer if you have queries or comments.

At this time it is important we all remain focused and deliver on our Q1 commitments in our current business units.

In this regard it is very important we respect that the organisational changes are effective from 1 October 2018, unless where otherwise announced.

Current accountabilities and responsibilities including those important to the SSU must be maintained and respected until that date when the planned changes can be properly implemented.

In coming months, we will run a company health survey to get your feedback on how easy it is to get work done at Telstra. This will be our benchmark and help us identify further opportunities to improve and how well we are managing implementing change across the business.

Looking after each other is critical as we all experience change differently and at different times

While I hope this provides some clarity, I understand people will be uncertain about what these changes mean at an individual level. When there are individual impacts, we remain committed to speaking to everybody affected first and supporting them throughout the process. Please know that EAP support is available at all times and more information is available on the transition program.

Fundamentally re-engineering how Telstra operates with our new operating model
With our single strategy and shared goals, the way we operate will be re-engineered to support an end-to-end operating model.

We will only be successful if we collaborate and work together differently and fundamentally change the role of leaders. We will remove complexity and management layers, decrease the focus on hierarchical decision-making, and increase the focus on empowered teams making decisions closer to the customer. The role of the leader will be to enable and empower, rather than direct, their teams.

Initial organisational model initiatives for 1 October

*To support new ways of working, the roll out of methodologies that improve our agility, speed and cross-functionality will be expanded in Product & Technology, Networks & IT, GBS and select parts of our customer segment functions. Some frontrunner teams will shortly start to test, learn and refine how we apply these methodologies as we lead into 1 October.

*To reduce hierarchy and to simplify, as we re-design functions, we will remove between 2 to 4 layers across the company. We will also use consistent job titling regardless of role across the company.

*To support people to work in the new operating model, every employee will attend an onboarding program, which will progressively roll out from October.

Remaining focused on Q1 so we deliver our targets

Our new structure and operating model will take effect from 1 October. Until then it is important we all remain focused and deliver on our Q1 commitments in our current business units.

We are fundamentally transforming Telstra and the experience we provide our customers. I am confident Telstra will be an exciting and very different place to work and do business with in the future and I look forward to sharing more detail with you over the coming months.

There will be plenty of opportunities to ask questions, starting with an employee livestream today at 1pm. It would be great if you could take the time to attend where possible, otherwise the recording will be on Corporate News.

Andy

This post originally appeared on Telstra CEO Andy Penn’s LinkedIn page. You can follow him on LinkedIn here.