Telstra is poised to cut its workforce as part of an ambitious drive to implement artificial intelligence (AI) across its operations, aiming to secure a significant portion of its promised $500 million savings by mid-next year.
Under the leadership of CEO Vicki Brady, Telstra has already realised around $105 million or 20% of its targeted savings as part of its T25 strategy. Brady is confident the bulk of the outstanding $400 million in savings can be achieved within the next 18 months through intensified cost-cutting measures.
Despite the addition of 340,000 new customers in the second half of the year — attributed partly to Optus’s major outage in November — Telstra's half year financial performance slightly fell short of analyst expectations, while the company lowered the upper limit of its full-year earnings guidance.
Nonetheless, Telstra announced a 5.9% increase in its interim dividend to 9 cents a share, a move that didn’t prevent a 2.3% decline in its share price, contrasting with yesterday’s broader market gains.
CFO Michael Ackland indicated that to achieve its T25 cost savings, Telstra would undertake more substantial measures than previously anticipated.
When questioned about the possibility of job reductions, Brady did not dismiss the prospect, highlighting an ongoing review of the cost base in the Network and Services (NAS) business, which has shown flat revenue performance.
This strategic pivot follows the completion of Telstra's T22 strategy, which delivered $2.5 billion in annual cost savings and saw a reduction of 8,000 jobs over four years. Telstra's current focus includes digitising IT operations, phasing out obsolete systems.
An AI-fuelled organisation
Telstra is also leveraging AI, which has already been integrated into half of its operations, as it seeks to enhance efficiency and reduce costs. Brady said it had also created an AI academy to train staff to use the technology.
“Our ambition is to become an AI-fuelled organisation to help us unlock better outcomes for our customers, our people and organisation. To underpin this, we are simplifying and modernising our tech and data landscape and building reusable AI products for the whole organisation to accelerate time to value.
“We are now using AI to improve half of our key processes, including to automatically detect and resolve fixed services faults and to solve customer issues faster. For example, in the half (year), we piloted new AI applications including ‘Ask Telstra’ – an open AI-based solution with Microsoft to help our frontline teams find the information they need for better and more quickly serving our customers.”