Telecom’s woes

The Herald reports:

plans to slash 200 management jobs by mid-year, and more lay-offs are likely as the company seeks to slash its costs.

Never good when a company cuts jobs, but often necessary. Very tough on those in the affected areas.

The job losses within its 8000-person workforce are part of a programme announced last year that aims to slice more than $500 million from the business’s costs by 2013.

Mr Reynolds said $113 million had been cut last year, and a further $244 million was expected to be cut this financial year.

200 out of 8,000 is 1 in 40 jobs gone, but as they are all management jobs, then the ratio will be considerably lower.

In a related story:

Telecom is seeking relief from the Government on its regulatory obligations in the face of pressure on earnings.

I’m somewhat supportive of this, but the key is timing. As a fibre network is built, access to the copper legacy network will become less important, and access conditions can be reduced. But one needs that fibre network to be reasonably progressed, before one can start to strip back some of the copper network regulation.

UPDATE:

Tom Pullar-Strecker writes in the Dom Post:

Telecom has caved in to Government pressure and will consider splitting into two separate companies.

This would make it more likely that the Government’s $1.5 billion plan to roll out ultrafast broadband to three-quarters of homes will get off the ground.

I’m not sure it makes the fibre to the home plan more likely. I think it makes Telecom’s chances of winning the bids more likely.

After playing chicken with the Government over the ultrafast broadband contract, chief executive Paul Reynolds blinked first and said the company was open to working with the Government on a “full range of approaches”.

I’m not sure I quite read that as saying they will consider splitting. If Telecom is open to spinning Chorus off (which would be a good thing), they should make it clear, as it will improve their chances (in my opinion) with the fibre to the home initiative.

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