Australia's Optus to Cut 440 Jobs, Blames Automation – Reports

Optus, Australia's second-biggest telecom operator, is to cut another 440 jobs, according to Australian press reports, as the introduction of automated processes and the deployment of digital technologies make some employees redundant.

The news brings the total number of job cuts at Optus Administration Pty. Ltd. to around 1,040 this year, after the operator announced in May it would slash 400 jobs and confirmed plans to shut down its 200-person Virgin Mobile subsidiary. Optus had 8,370 employees on its books in June, according to press reports, putting the total planned headcount reduction at about 12% of total staff.

The Sydney Morning Herald attributes this statement about the job cuts to an Optus spokesperson: "As we continue to evolve the way we work, do business and fund future investments, we are removing duplication, improving our operating efficiency and embracing next-generation technologies, like digitization and automation, to achieve this goal."

The cuts are set to affect workers across the company's networks, wholesale and satellite businesses, according to reports. Some roles will disappear as Optus combines its brand, communications and digital marketing functions.

However, the overall impact on headcount remains unclear because Optus also appears to have said it will create some new "front line" and IT roles, without providing additional details.

Trade union representatives are reported to have slammed the company's latest efficiency plans as a "disgrace," saying there has been no consultation with the workforce.

The latest jobs update is another grim development for workers in Australia's telecom sector after Telstra, the country's biggest operator, recently said it would cut about 8,000 jobs, or 25% of its entire workforce. (See Investors Unmoved by New Telstra 4-Year Plan.)

Like Optus, Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) has blamed the move on automation and the rollout of new digital technologies. Both companies, however, have also been affected by the emergence of the NBN, a government-backed venture that is building a wholesale broadband network across the entire country. (See Telstra Profits Pummeled by NBN.)

Under that scheme, Telstra and Optus were forced to sell infrastructure to NBN Co Ltd. and relinquish some of their former wholesale and network activities: That job cuts will hit staff at the Optus networks and wholesale divisions is therefore not surprising.

Optus is clearly under pressure to restore profitability to historical levels after it saw net profit fall 3.5% in its recent first quarter, to just A$154 million ($113 million), compared with the year-earlier period.

The operator reported an EBITDA (earnings before interest, tax, depreciation and amortization) margin of just 30.1% in the quarter, down from 31.3% a year earlier, despite a 5.7% increase in revenues, to around A$2.2 billion ($1.6 billion).

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Telstra and Optus are certainly not the only telcos internationally whose employees have been hit by automation, but the Australian companies have been unusually candid in admitting that new technologies will have a major impact on staff.

Telcos in other markets have played down that impact to varying degrees. The UK's Vodafone Group plc (NYSE: VOD), which operates in Australia through its Vodafone Hutchison Australia business, has insisted the focus of automation is not to reduce staff numbers but to simplify processes and improve customer service, for example. (See Vodafone Prioritizes Automation as Efficiency Bolsters Margins.)

Vodafone was today reported to be in discussions about a merger of its Australian business with broadband operator TPG. Such a tie-up would also threaten job cuts as the operators, if they combine forces, would certainly look to reduce costs by removing duplicate roles. (See Eurobites: UK's Vodafone Eyes TPG Merger in Australia – Reports.)

Research carried out by Light Reading shows that more than 107,000 jobs have been cut during the past two fiscal years across 20 major telcos tracked on a regular basis. The figure equates to 6% of jobs at those companies before the period in question. (See Big Telcos Have Slashed 107K Jobs Since 2015.)

— Iain Morris, International Editor, Light Reading

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