Ericsson Australia has confirmed it let go of around 10 staff last week, but the industry is abuzz with speculation that hundreds more may follow as its biggest customer, Telstra, announced a $1 billion cut back in capital expenditure for the coming financial year.
An Ericsson Australia spokesperson said the cuts made last week were part of the 300 roles it announced last December. Back then the company said 100 full-time positions and 200 contractor roles would be cut over the following six months.
The spokesperson yesterday repeated last year's statement that the cuts were due to a number of projects winding down, adding that last week's cuts were from Sydney and not from Melbourne where it has retained large numbers thanks to the $1 billion Next G network deal inked with Telstra in 2006.
However, several industry sources have speculated that Ericsson Australia has more staff cuts in line, which two sources have said may be "in the hundreds".
A major issue for the outlook of Ericsson and other vendors such as Alcatel-Lucent, which have won mega deals with Telstra, will be the telco's ambition to shave $1 billion off its capital expenditure budget for financial year 2010.
Telstra chief financial officer John Stanhope last week outlined its plan to boost free cash flow from $4.4 billion this year to $6 billion the next, the majority of which would come from cutting back capital expenditure. Stanhope noted that the peak of its spending on transformation had now passed.
Ericsson Australia's other major customer, VHA, also looks set to complete the majority of its 3G network expansion in coming months, with VHA reporting it should reach its 94 per cent coverage target by 31 August.