Optus is not an Australian company, it has oversees interests involved.
400 appears the operative number. Refer previous post.
The clear issue here is disruption, the sacking of people as they are displaced by automation – the quote is “remove duplication and establish a more sustainable cost base”. I sense ‘sustainable’ is code for automation.
I remember in the 1980’s when there were so many cuts to staff. This is because the focus is profit not people. The nature of economic growth is to minimise costs. Whilst people are seen as economic units, not citizens in a society, they will be cut to ensure profit maximisation (not optimisation).
The nature of competition will create more ruthless approaches to gain market share, more use of data gathering and disruptions as they jostle for dominance. This is the price wars as greed moves people to make money out of this industry.
I question what is – duplication??
I question investment in network infrastructure – is this cables, wires, 5G? What exactly does that mean? What does it mean for the public?
The comment is made:
“…yet-to-be-unveiled 5G network to become a substitute for the National Broadband Network (NBN)…” how much did NBN cost taxpayers. What was the opportunity cost with replacing copper wires (public infrastructure) with cabling that is private. How will 5G be a substitute for NBN? What about the health effects of 5G that are being reported around the world.
Optus to sack 400 workers, more job cuts expected in telco sector
Optus has confirmed it will slash approximately 400 jobs, with no plans to close any of its retail stores.
The reason for the job cuts is to “remove duplication and establish a more sustainable cost base”, a company spokesperson said.
It’s also part of the telco’s strategy to fund “future investments” in what it describes as an “increasingly competitive and disruptive market”.
Last week, Optus announced it would close its subsidiary brand Virgin Mobile — which will result in 200 job losses and 36 store closures.
When asked by the ABC about how much it expects to save from the latest round of job cuts, Optus declined to answer.
Expect more job cuts
“As mobile network operators lose control of their ability to grow revenue, it becomes more important for them to manage their cost base,” S&P analyst Graeme Ferguson said.
“They need to very carefully manage their cost base due to this significant competitive pressure.”
The competition is only expected to intensify with TPG’s entry into the 4G mobile market this year — as it joins the incumbents Telstra, Optus and Vodafone.
“This is just the tip of the iceberg, as we could see even more job cuts from other telcos — not just Optus,” telco analyst Foad Fadaghi said.
Telstra’s $20b question
Should Telstra sell its future NBN revenues now and if not, what happens when they dry up?
“Network carriers want to cut costs as a result, and the first place to look is where there’s duplication, hence the job cuts.”
Mr Fadaghi said he is not surprised about the job cuts, given the price wars occurring in the broadband market.
“You can get unlimited services for $10-$30 per month nowadays, much cheaper than 12 months ago.
“And the ability to charge per extra gigabyte is disappearing across the board, since 40 per cent of connections are now unlimited fixed broadband.
“Once that proposition disappears, expect job cuts.”
Another casualty of the heated competition in the telco space is Telstra’s share price, Mr Fadaghi observed.
Australia’s largest telco has had to defend its dominant market position by discounting against its competitors, which eats into its margins and reduces investors’ appetites.
Telstra stocks have fallen to $2.84 (at 2:20pm AEST), around their lowest price in seven years.
‘Market share’ is the key
“Now more than ever, there’s a possibility that wireless technology may become a substitute for fixed broadband,” Mr Ferguson said.
He believes that is why all the main telcos are investing heavily in network infrastructure — particularly as they see potential for the yet-to-be-unveiled 5G network to become a substitute for the National Broadband Network (NBN).
Not to mention, in his words, that “most people are on sub-optimal fixed broadband”, and the NBN relies on an “inferior technology mix”.
“Therefore, it’s critical to gain market share in the mobile market.”
“It’s harder to win customers than to retain them, as they tend to be ‘sticky’ with their existing provider — just like with electricity and gas.”