Staff cuts come as Telstra commences network upgrades

Telstra chief executive Sol Trujillo outlined the cuts to analysts at a briefing dealing with the telco's mid-year financial results in Sydney this morning, saying the number was made up of the equivalent of 1,000 full-time staff and included some contractors.

The move is part of Telstra's ongoing plans to reduce costs, with 10,000 to 12,000 staff expected to go over the next five years.

The telco is also making progress on a number of network construction projects outlined at its strategy briefing in November.

Trujillo said his company and vendor Ericsson had conducted 1,500 site audits and 200 site designs for the nation-wide third-generation mobile network Ericsson was contracted in December to build.

Telstra has issued the first AU$150 million purchase order for equipment for the 3G network, with installation already having started in some areas.

In addition, the telco signalled it will receive the first 20 DSL Access Multiplexers (DSLAMs) from vendor Tellabs by the end of February.

DLAMs are network equipment that sit in Telstra's telephone exchanges and deliver DSL services to customers. Telstra has previously said it is upgrading its network to the ADSL2+ standard which allows speeds of up to 24Mbps.

A number of the telco's competitors already offer ADSL2+ services, but Telstra's ADSL speeds (and consequently that of its wholesale customers) are currently limited to 1.5Mbps.

Telstra has also received the first Alcatel 'softswitch' -- a software telephony switching device for connecting calls -- and is currently testing the hardware.

Alcatel won the right to provide a large chunk of the hardware for the telco's next-generation network buildout. Telstra also said it had signed the contract with Cisco for that network's Internet Protocol (IP) core.

In terms of Telstra's transformation of its operational and business support IT systems, Trujillo said detailed scoping of the project was complete, and vendors involved with the project had been engaged.

Telstra has signed a licensing agreement with Customer Relationship Management (CRM) software vendor Siebel (which has recently been acquired by Oracle). Back in November, Trujillo said Accenture would also be involved in a large-scale CRM project.

In terms of complexity reduction -- a key strategic outcome for Telstra -- Trujillo said a pricing simplification team had been established, and some "IP product simplification" was under way.

Scoping for the AU$200 million training program to provide field staff with the skills to build, deploy and run next-generation networks has commenced.

During the analyst briefing Trujillo was peppered with questions from the investment community, with many concerned about the telco's December decision to put its fibre-to-the-node (FTTN) customer access network on hold.

In December, the telco said the FTTN component of its next generation network would remain on hold after the government opted not to intervene to allow the carrier to restrict third-party access to its planned new infrastructure.

Analysts were also concerned about Telstra's risings costs and the threat of declining revenue in Telstra's legacy copper telephony network -- the Public Switched Telephony Network or PSTN.

"A major concern for us remains the decline in PSTN," admitted Trujillo.

In addition, several analysts questioned the chief executive about Telstra's ongoing debate with the federal government and the competition regulator about the cost of rivals like Optus accessing Telstra's copper network -- known as Unbundled Local Loop services.

Trujillo and Stanhope largely pointed out the ACCC had not yet finalised its position on the issue.

During the briefing the CEO also announced Telstra had snapped up high-profile Qantas chief information officer Fiona Balfour to lead the telco's centralised IT organisation and core IT programs, as well as to oversee the company's operations support system and business support system projects over the next 3-5 years.