Telstra signalled the progress it is making on its T22 transformation strategy on Wednesday by bringing forward $500 million in writedowns on its legacy IT systems and confirming that 6,000 of the 8,000 job losses planned as part of the strategy will occur this financial year.
It means that $200 million of restructuring costs are also expected to be brought forward to the current year.
Like other legacy telecom firms around the world, Telstra is finding it hard to battle cut-throat competition and new technology that has crushed its mainstay fixed-line businesses.
"We expect to have announced or completed approximately 75 per cent of our direct workforce role reductions by the end of FY19," said Telstra chief executive Andy Penn.
The company stuck to its full year earnings guidance and said the writedown and restructuring costs are subject to board approval.
"We will continue to see role reductions as we replace our legacy systems, digitise and simplify how we work, and respond to things like declining NBN and call volumes, but if a final decision is made on the proposal announced today we expect the majority of our T22 restructure will be behind us," said Mr Penn.
Telstra announced the T22 strategy in June last year to cut $2.5 billion in annual costs, net job losses of around 8,000 employees as well as streamlining its services and product offering.
Telstra said it has started consultation with unions and staff over the job cuts and expects the process to conclude in mid June which means that that extra $200 million in restructuring costs are expected to be recognised this year, but the cash savings will not be felt until the employees leave next financial year. It will raise the restructuring costs for the current financial year to $800 million.
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Mr Penn said the $500 million writedown of legacy systems, which will have a positive impact on depreciation and amortisation charges going forward, is due to the progress it has made in setting up its new systems.
"It's a beacon of the fact that we are making very solid progress on the digitisation part of our T22 program so we're pleased about that," said Mr Penn said on a conference call.
Telstra shares were trading 2.5c higher at $3.585 after the announcement.
More to come