Telecom to cut hundreds of jobs

Telecom says there will be job cuts "well into the hundreds" this year as it seeks to reduce costs across its business.

The company this morning reported adjusted net profits of $156 million for the six months to December 31, up 57.6 per cent from the year before.

As with all of Telecom's results since its split with lines operator Chorus, the company stressed that comparisons with previous periods were complicated by the demerger.

Telecom and Chorus split in late 2011, so Chorus could take part in the Government's rollout of a high-speed fibre data network.

Asked when there would be more information known about the job cuts, chief executive Simon Moutter said the company was "clearly very concerned about the impact of these decisions on our people and the right thing to do in any organisation is to get to the plans worked out properly to work that through with our people first and to treat them with the greatest respect with this process".

"What we do know without sugar-coating this is that it is apparent it will be a number well into the hundreds. I can't be more specific than that right now but we will be a in a position to share more information over the next two to three months."

Moutter said there was no area of the business that had not been asked to "look hard at everything we do to make sure we remove the legacy culture - layers of middle management, the duplication of effort and find a way to make a contribution to get our cost base more competitive".

During a conference call this morning, Moutter said Telecom's cost-base "unfortunately remains uncompetitive".

He said Telecom had a higher cost-base and the company employed more people than similar companies in the telco and ICT sector.

Moutter said there was no point waiting to implement changes until the next financial year.

"We believe we must move quickly," he said.

Telecom, which employs around 7000 people, also this morning reported adjusted earnings before interest tax, depreciation and amortisation of $506 million for the half year period, up 3.7 per cent from the six months to December 2011.

Its adjusted first-half revenue of $2.1 billion was down 8.5 per cent on adjusted revenue from the same period the year before. It is paying an interim dividend of 8 cents per share.

In a statement, Telecom chairman Mark Verbiest said the company had begun a strategic shift from being a fixed-line and mobile player to a "competitive, future-orientated mobile and data-centric service provider".

"Behind the headline numbers, our business is changing significantly. Mobile revenue is higher on the back of demand growth and there has been good growth in net customer connections since the closure of the CDMA network.

"On the other hand, fixed calling revenue has continued to decline in line with industry trends and following a strategic decision by our Australian unit AAPT to rationalise some low margin business.

"These revenue shifts reflect the major global trends as the telecommunications sector is becoming increasingly focused on mobile and data," Verbiest said.

The company is due to give a more in-depth update on its strategy in May.

Moutter said it had added 103,000 mobile customers since August - after it closed the older CDMA network last year. That would put the total number of Telecom mobile connections at around 1.7 million.

After announcing the company hoped to stabilise its slipping market share in broadband last year, Moutter said today that Telecom had gained 13,000 customers in this area in the six months to December.

He called this "a good performance in the context of an intensively competitive marketplace".

Telecom has around a 50 per cent share of the broadband market.

- Hamish Fletcher of the New Zealand Herald

Job cuts

GJ Philip: Why did Telecom shout 50 of its managers, with their wives / husbands, to Hawaii very recently, where they stayed in a fabulous beach resort for a week? I recall Christine Rankin doing something similar and losing her job.

It looks like the classic redundancy scenario: get rid of those who actually do the work, and leave the CEO's golf buddies alone, just like Mercury Energy did before they lost power to the Auckland CBD.

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