Telstra halts redundancies for 6 months amid COVID-19 pandemic

Telstra halts redundancies for 6 months amid COVID-19 pandemic

Plans to recruit 1,000 contractors to cope with call centre volume

Andy Penn (Telstra)

Andy Penn (Telstra)

Credit: Telstra

Telstra has frozen its headcount reduction program for six months as the coronavirus pandemic creates unprecedented demand on its network and services.

The telecommunications giant also intends to hire 1,000 contractors to deal with an influx of calls to its customer service team as social distancing measures place added pressure on Australia’s internet networks.

In an update to its shareholders, the publicly-listed telco said it would also provide “relief” to small businesses and consumers unable to pay their bills by suspending late payment fees and disconnections until at least the end of April.

It will also extend any employment sponsorship expiring this year for another 12 months as numerous countries turn to travel bans and lockdowns to curb the spread of COVID-19.

“We are looking at every aspect of our business to see what we can do for our employees, customers, suppliers and the economy more broadly, while we maintain a focus on long term value creation,” Telstra CEO Andy Penn said.

“The most important thing is that as many businesses as possible are still here when we get through this crisis.”

However, Telstra stressed the redundancy freeze will be a temporary measure and it still intends to carry out its cost reduction program, which aims to save $2.5 billion annually by the end of FY22.

Announced last year, the measures saw 6,000 jobs axed last financial year and a total number of total redundancies expected to hit 9,500 by 2022. Penn was later criticised for receiving a 34 per cent pay rise amid the cuts. 

Telstra said it also plans to pay an interim dividend next week, distributing $951 million to shareholders. 

For the upcoming financial year close, Telstra’s current outlook remains within the range of its FY20 guidance, but is “at the bottom end of the range” for both free cash flow and underlying EBITDA -- between $0-500 million in growth. 

It will, meanwhile, be in the top range for capital expenditure as the telco intends to further accelerate the roll out of its 5G network, bringing forward $500 million in capital spending to this year from the second half of FY21.

 “We know there will likely be more impacts for us from a financial perspective through this unprecedented period,” Penn added.

“It is a rapidly evolving situation and therefore, notwithstanding our outlook update today, we will continue to monitor the effect of COVID-19 on our business and make further updates if necessary.”

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