Telstra's Employment Crisis: Privatization, NBN, and Job Cuts Analysis

This report analyzes the employment relationship within Telstra, an Australian telecommunications company. It examines the impact of privatization between 1997 and 2011, where the government sold shares, increasing Telstra's market power. The report then explores the influence of the National Broadband Network (NBN), a government-owned corporation, and its agreement with Telstra to disconnect copper wire customers and switch to coaxial networks. This led to significant job cuts, with Telstra laying off a substantial portion of its workforce. The report highlights the blame game between Telstra's CEO and the government, and the financial repercussions, including reduced profits and share prices. The conclusion emphasizes how the NBN has negatively affected Telstra's business, leading to reduced staffing levels and the state being held responsible for the company's financial difficulties.

Running Head: EMPLOYMENT RELATIONSHIP
Employment Relationship
Name of Student:
Name of University:
Author’s Note:

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Table of Contents
Introduction......................................................................................................................................2
Privatisation of Telstra.....................................................................................................................2
Impact of NBN................................................................................................................................2
Blame for loss in jobs......................................................................................................................3
Conclusion.......................................................................................................................................3
Reference List..................................................................................................................................4

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Introduction
Australian telecommunication company Telstra Corporation Limited is engaged in
building and operating networks for telecommunication with digital connection and content
services. Telstra has grown as the leading and fastest mobile networks in Australia due to
provision of simple content solutions. However, its powers has subsequently gone down after it
merged with NBN (Taylor 2019).
Privatisation of Telstra
NBN (National Broadband Network) is a corporation owned by Australian government to
create a monopoly market for wholesale provider of broadband. Privatisation is the transmission
of public sector into private sector by transferring the ownership from the government.
Australian government privatised Telstra between 1997 and 2011 by selling one-third of its
shares for 14billion dollars and indexed it on Stock Exchange (Quiggin 2019).
Telstra’s market power rose due to demand for internet that converted the firm as internet
supplier rather than only mobile services. During the late 1990s Telstra and Optus maintained a
duopoly market domination until new entrants emerged into the market. When Rudd government
came into power, they made a scheme that broadband system has to be built by the government.
The Australian government had the legal ownership of private firms like Telstra since 2007 and
has sourced resources to the government.
Impact of NBN
In 2011, Telstra agreed with NBN to disconnect its copper wire customers for low speed
and switch to coaxial networks in the installed places in order to lease dark fibre, ducts to NBN.

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An amount of 11 billion Australian dollars is reconstituted on Telstra’s account for relocation of
hybrid fibre-coaxial and copper networks to NBN by removing premise of the networks.
The NBN has again clubbed with the fixed broadband network provider of Australia,
establishing the fact that Telstra does not operate as the prime wholesale supplier like it has been
since privatisation. As a result, Telstra had to lay off a quarter of its employees (Hutchens 2019).
Blame for loss in jobs
The chief-executive of Telstra Andy Penn blamed the government for compressing
workforce of 8000 people. NBN Co. has a strength about 24,000 employees, most of which are
from Telstra and generates a direct employment of 7000 people. NBN is reported to have
alternated the market place with a reduction in greater opportunities. Moreover, Telstra has
planned to cut around 8,000 jobs in major operations. NBN has taken a financial size of Telstra’s
profitability and has lost a sizeable amount of shareholders (Dickinson 2019).
The share price fell down by 7 percent in initial trade which has slightly redeemed and is
yet to improve by 5.5 percent. A drop of 27 percent of net profit after tax is seen on Telstra’s
account and total income decreased by 4.1 percent. More than 1.7 billion dollars were rolled out
to NBN. The company has accused the government’s plan to create a monopoly market structure.
Conclusion
The NBN has deeply affected Telstra’s business into hitting the bottom line such that it is
impractical for Telstra to predict the same level of staffing. This structure has led to a fall in
Telstra’s earnings as government took half of company’s profit and the blame is on the state.

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Reference List
Dickinson, E., 2019. Telstra ‘seeking to position’ itself for NBN purchase, unions claim. [online]
CIO. Available at: https://www.cio.com.au/article/664225/telstra-seeking-position-itself-nbn-
purchase-unions-claim/ [Accessed 30 Aug. 2019].
Hutchens, G., 2019. Telstra to cut 8,000 jobs in major restructure. [online] the Guardian.
Available at: https://www.theguardian.com/business/2018/jun/20/telstra-to-cut-8000-jobs-in-
major-restructure [Accessed 30 Aug. 2019].
Quiggin, J., 2019. NBN: we would have been better off without privatisation | John Quiggin.
[online] the Guardian. Available at:
https://www.theguardian.com/commentisfree/2013/aug/21/national-broadband-network-elections
[Accessed 30 Aug. 2019].
Taylor, J., 2019. NBN Co told to forget about recouping investment and focus on service.
[online] the Guardian. Available at: https://www.theguardian.com/technology/2019/jul/31/nbn-
co-told-to-forget-about-recouping-investment-and-focus-on-service [Accessed 30 Aug. 2019].

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