Anxious days ahead as VHA cuts

Tough decisions and a period of high anxiety lies ahead for Australia's third-largest mobile telco VHA as it determines which suppliers and staff to cut in the coming weeks.

Tough decisions and a period of high anxiety lies ahead for Australia's third-largest mobile telco VHA as it determines which suppliers and staff to cut in the coming weeks.

"Anxious" and "a bit of a rollercoaster" are the terms one VHA staff member has used to describe the atmosphere at VHA as it heads towards the pointy end of its merger plans.

The telco, which employs very few unionised staff across both the Hutchison and Vodafone businesses, gave employees until a fortnight ago to re-apply for their roles, and according to a VHA spokesperson, the process is underway. "The internal selection process has started. Interviews are underway and we're working through that process now," they said.

While staff were told in February that redundancies should be expected, it's taken five months to reach that point, according to one employee who spoke with ZDNet.com.au. Staff have not been told the total headcount VHA is aiming for following the request for both company's head office staff — human resources, information technology and finance — to reapply for their roles. Hutchison chief technology officer Michael Young, however, told its IT department in a meeting attended by around 300 people some weeks ago that only 140 full-time positions would remain — though staff had little idea who in the room were contractors or full-time staff.

Another source has claimed that staff cuts have already taken place within the IT department, and has alleged 40 IT staff, including some senior management, were recently made redundant. VHA's spokesperson did not deny cuts had already been made, however, they declined to confirm the number.

The only goal VHA has outlined is that it expects the merger to deliver ongoing savings of $2 billion.

VHA has taken a top-down approach to the appointment of staff, with directors announced at the time of the merger. Over the next week VHA is expected to internally announce the general managers of each division of the new company, which will be followed by general staff in the coming two weeks. It's believed that general manager appointments will be dominated by Hutchison staff; VHA's finance department meanwhile, has been dominated by Vodafone appointments.

Ovum telco analyst Nathan Burley said the two companies' low or negative profits prior to the merger would likely translate into reducing its headcount.

"Now VHA has a similar scale to Optus, it should be able to push up margins to closer to Optus. One way they will do that will be through cost-cutting, which potentially means jobs," said Burley. VHA is also unlikely to be hampered by unions in coming months as its headcount reduction target becomes clear.

According to Ed Husic, spokesperson for the Communications Electricians and Plumbing Union (CEPU), neither Vodafone nor Hutchison had significant union numbers. Vodafone in particular had kept unions out of most of its global operations, except in some locations such as South Africa, said Husic.

Also under the microscope as part of VHA's ambition to boost profitability are the two former company's outsourcing contracts. Non-network management suppliers likely to be chopped, according to Springboard technology analyst Phil Hassey, would be those that have deals with Hutchison.

"I would anticipate, as the larger of the two players, Vodafone's suppliers will be retained," he said.

If correct, losers from the merger are likely to be Tata Consultancy Services and Western Australian IT services firm, ASG, which provide Hutchison's application development and maintenance services, and desktop services, respectively.

Vodafone's key IT suppliers meanwhile are HP's services arm EDS and IBM, which have locked in deals due to expire in the coming year.

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