Telecom confirms up to 1230 job cuts by mid-year; $70-$80m charge
UPDATE / March 28: Telecom has confirmed it will cut staff numbers by up to 1230 by mid-year.
The cuts will incur a $70 million to $80 million one-off restructuring charge.
The company expects to save $90 million to $100 million a year by reducing its headcount, it said in a statement.
Telecom says it had 7530 staff as of at December 31, 2012. The number will be reduced to 6300 to 6600 by the middle of this year (the end of Telecom's 2013 financial year).
"The flow on impact of these changes onto revenues and non-labour operating costs is uncertain," Telecom's statement says.
The statement implies the cull will continue after mid-year.
"Telecom expects to incur further redundancy and other one-off costs associated with cessation of business activities as it works through the remainder of its strategic change process. Telecom will provide a second update once decisions are taken," it says.
Tech companies including Xero, Orion Health and Intergen are looking to fill hundreds of open tech positions. Some observers have expressed skepticism that Telecom middle managers will have skills transferable to high-growth software companies. ICTNZ CEO Candace Kinsor told NBR some of the jobs required skills outside of software development, such as project management and marketing, and would suit ex-Telecomers. So did Xero CEO Rod Drury and Orion Health boss Ian McCrae. However, Ms Kinser warned many positions would not be at the $100,000 level enjoyed by just under 3000 Telecom staff during its last financial year.
Telecom shares [NZX:TEL] closed up 4.32% to $2.32 yesterday.
Forsyth Barr has a holding rating on the stock, and a 12-month target of $2.33.
Telecom on verge of cutting 1500 jobs - Curran
March 21: Telecom is on the verge of cutting up to 1500 jobs, Labour ICT spokeswoman Clare Curran claims.
In a February 22 conference call with media after Telecom's half-year result, Telecom CEO Simon Moutter said job cuts would run into the "hundreds."
On March 13, the company said it would also lay off 120 across the Tasman as it scaled back Gen-i Australia.
Telecom started the financial year with around 7600 staff (down from 8629 before the November 2011 Chorus spin-off) and laid off around 350 in the first half before Mr Moutter's announcement.
It's an open secret inside Telecom that a 5000 staff level is being targeted to make the company competitive with the merged Vodafone-TelstraClear, Ms Curran says, adding the 1500 she has been told my insiders could be conservative.
Telecom general manager for coporate relations Andrew Pirie told NBR Online, "We have nothing more substantive to say beyond what was said at our half yearly results announcement on February 22.
"At that time Simon Moutter said that job losses were likely to run “well into the hundreds” as Telecom reorganises itself to compete more effectively in today’s fast changing telecommunications marketplace. You may also recall he wouldn’t be drawn into confirming or denying whether the total number would stretch into four figures as opposed to three. Fundamentally then, Ms Curran’s statement does not really say anything new over and above what we said on February 22."
Once Telecom crystallise the costs involved through redundancies etc, as a listed company it will be required to make an appropriate disclosure to the stock exchange, Mr Pirie says.
Call for government intervention
"The fact that Telecom was over staffed and unable to properly compete in the market was well signalled," Ms Curran says.
The Dunedin South MP says the government should have a plan to build jobs in the sector but “National is taking a hands off approach to the single biggest job loss our country has ever seen, all because Steven Joyce says it’s got nothing to do with him.”
Skilled workers will be lost to Australia, Ms Curran says.
A spokesman for Economic Development Minister Steven Joyce's office said the minister was general terms of proposed significant job losses at Telecom, but had not had any update on layoff numbers since the February 22 market update.
“Our office has been in contact with Telecom to explore ways to facilitate the movement of any outgoing Telecom employees into other employment in the ICT sector.
There is massive demand in the ICT sector for skilled employees, the spokesman says.
“For example, as the Herald reported last Friday, one website last week was showing 1300 ICT vacancies in Auckland alone – with pay rates of up to $1500 a day for some roles.”
Telecom [NZX:TEL] closed down 1.31% to $2.25, near the bottom of their 52-week range ($2.14 - $2.87).