Telstra’s 8,000 job cuts to have minimal impact on office market

Telstra’s 8,000 job cuts to have minimal impact on office market

22 June 2018

Telstra’s decision to axe 8,000 jobs, split its infrastructure holdings and launch a $2 billion asset sale immediately caught the attention of the property sector, which is heavily exposed to the telco giant’s extensive footprint.

The plan is one aspect of a range of sweeping changes, labelled Telstra2022, including the sale of $2 billion of assets, 8,000 net job cuts — including one in four middle-management roles. Telstra is cutting a total of 9,500 jobs, but is creating 1,500 new roles.

The strategy, named Telstra2022, has four key pillars:

  • Radically simplify our product offerings, eliminate customer pain points and create all digital experiences
  • Establish a standalone infrastructure business to drive performance and set up optionality post the NBN rollout
  • Greatly simplify our structure and ways of working to empower our people and serve our customers
  • Industry leading cost reduction programme and portfolio management.

Telstra CEO Andrew Penn said the strategy would fundamentally change the nature of telecommunication products and services in Australia by eliminating many pain points for customers.

“We will take a bolder stance and use the disruption in the telecommunications industry to lead the market for the benefit of our customers, employees and shareholders,” Mr Penn said.

The loss of that many positions would ordinarily translate into a retreat from around 100,000 square metres of office space, reports The Australian Financial Review.

Some of Australia’s biggest property owners – Investa, Dexus, and Charter Hall – play landlord to the national telco along the eastern seaboard and would potentially be the first hit by vacancy.

Already this month, Telstra is expected to complete its vacating of 32,000 square metres of space at 35 Collins Street, an AMP Capital-controlled building. Much of that is being re-leased to the state government.

In the meantime, Telstra has been steadily converting its headquarters at Investa-owned 242 Exhibition Street in Melbourne into agile-style working place, allowing it be more efficient and occupy a smaller footprint.

“They haven’t leased anything additional,” noted one industry insider.

“But what they’ve done is they’ve been able to refit and restack their headquarters in Exhibition Street.”

Elsewhere in the Melbourne, Telstra has around 6,000sqm of space at 180-222 Lonsdale Street at the QV complex which is owned by Dexus in conjunction with the Grollo family.

That space may also be ultimately given up by the telco.

In Sydney it is similar story. Telstra has been progressively vacating 320 Pitt Street, which Singapore’s ARA Asset Management bought for $275 million from a partnership including Propertylink last year.

Meanwhile, as Telstra shrinks, the nation’s wholesale operator National Broadband Network is expanding. In the past year, NBN has taken two major occupancies in Sydney and Melbourne, totalling around 40,000sqm.