22 Feb 2013

Jobs to go at Telecom as competition bites

9:48 pm on 22 February 2013

Telecom will cut hundreds of jobs in the coming months to combat intense competition in the retail phone and broadband market.

New Zealand's largest listed telecommunications firm on Friday downgraded its full-year forecast and announced a profit of $163 million in the six months to December, 35% lower than the same period the year before.

Telecom said its earnings are under pressure and downgraded its full-year forecasts due to tougher competition in the broadband market and a weaker performance from its IT business Gen-i.

The company has already axed 350 jobs in the first half of the financial year in response to greater competition from rivals such as Vodafone, and hundreds more will be cut in coming months.

Chief executive Simon Moutter said on Friday the company would embark on a strategic shift to become a mobile and data-orientated service firm, resulting in a significant material cost and job cuts.

"I'm not in a position at this point to give specific numbers around the changes ahead, but it is pretty apparent that it will be well into the hundreds of staff who leave us over the next few months."

Mr Moutter said more details about restructuring plans are due to be released in May.

"We are looking to refocus the Gen-i business around the areas that are of the highest value to our customers, in big data, mobility and cloud."

Mr Moutter said areas of concern for the business included a continuing decline in New Zealand fixed calling revenues and entry level broadband plans are not particularly profitable.

Govt's economic plan 'in disarray'

On Friday, Opposition parties seized on the news of looming job losses at Telecom as proof that the Government's economic plan is in disarray and its claim of being a great financial manager is false.

In recent weeks, there have been similar announcements of layoffs at New Zealand Post and Contact Energy.

The Labour Party said the Telecom job cuts come as a real shock and showed just how weak the New Zealand economy actually is.

Communications spokesperson Clare Curran said a question mark also hangs over the future of Telecom's contractors who number in the thousands.

Green Party co-leader Russel Norman said the true scale of the Government's economic mis-management is becoming clear.

"Four years ago, the Government promised us they would have an economic strategy that would create jobs for New Zealanders.

"Instead, what we've seen in firm after firm after firm is wide-scale job losses, we've got high unemployment and the Government's economic strategy is in total disarray."

PM focuses on the positive

Prime Minister John Key said on Friday he does not want Telecom to lay off staff, but the negativity of the move should not be talked up as New Zealand has a very flexible labour market.

"We have a lot of emphasis on jobs that are lost and not that much emphasis on jobs that are created. So we shouldn't talk ourselves into a sort of negative situation here, because actually all of the economic indicators look positive.

"That includes business confidence survey, consumer confidence survey, manufacturing data was up this week and the quarterly employment survey are all positive."

Mr Key said it was important to understand that the Government does not have responsibility for the situation of a private company, such as Telecom.

"This is a private sector company ... the new chief executive's come in and said, relative to his peers, this company has more staff than he believes is necessary. That's a constant process that always happens globally around the world all the time."