Telecom’s axing of 200 management jobs yesterday has serious implications.
I understand those jobs are being axed mainly from Telecom Technology and Telecom shared services. It is my understanding that the 200 managers axed represent a workforce of between 1000 and 2000. There are a myriad of projects and other jobs within Telecom that will be affected.
Rumours have been circulating that Telecom is using the pressures of operational separation as a smokescreen to mask its plans to outsource and ultimately offshore up to a third of its workforce in the long term.
Telecom owns and manages one of the largest pieces of core infrastructure in New Zealand. Our national telephone network. Our landlines. Our ability to call a 111 service. Telecom services almost every household in the country in some way.
Telecom has underinvested in its network. It has made some unwise and questionable decisions in the past.
It holds the majority of our ICT infrastructure. It is not just a private company, it is a privatised national asset. The government is foolish to continue to maintain a hands off position on this matter. Labour believes there are public interest issues at stake.
Ernie Newman from Telecommunications users group TUANZ has today sensibly said that Telecom’s strong hint yesterday that it might split into two companies would allow Telecom to have a future in telecommunciations.
It could be in Telecom’s best interests to remove any questions about it operating in a level playing field by splitting its network business Chorus into a separate company. This would require a review of its undertakings and may make many of them redundant. Interesting that Telecom is now signalling separating its business when it was adament a few months ago that it wasn’t.
Telecom should have a future in NZ. Its future has to lie in fibre and not copper. But it must also behave responsibly. Keeping kiwi jobs and a strong telecommunications skills base in NZ is a part of that.
Why would foreign owners be interested in anything more than maximising the amount of hard currency that they can remove from our country’s borders every financial quarter? Behaving like a responsible NZ corporate citizen and adding value to the technological infrastructure of New Zealand beyond the absolute bare minimum does nothing useful for overseas shareholders. These faraway shareholders have no ownership stake in improving the technological quality of life in NZ. Anyone wonder why XT was designed with a minimum of redundant systems, and why Telecom didn’t have enough specialist technical staff of its own to track down and solve its network problems? Poor management decision making by B Team managers and closely related to directives to minimise the cpaital spend on the network would be the most obvious explanation IMHO. Unfortunately for them I suspect that the payback period on their XT network investment is not going to meet their planned expectations.
Clever Telecom!I believe they are using resources better. I am certain they will be hiring Engineers (PhD’s)and Computer Scientist(PhD’s) to align their top management positions and other areas of expertise. Look across the waters of the mighty ocean, Australia, South Africa etc and you will see that right across the globe this is being done. Now let me explain why this is good?
1. Both Engineers (PhD’s)and Computer Scientist(PhD’s) can create, build and cope with the changes in technology which are occuring as a result they will not be marginalized.
2. This ensures that New Zealand can now take on the super powers of Technological innovations and compete if not become independent and inventive and able to join forces with anyone in the world, thereby raising the goal.
4. The people( Engineers (PhD’s)and Computer Scientist(PhD’s)) mentioned know the field, they created it, hence they will be able to manage it.
3. It also means softer options will have to become more competitive and innovative and resources are used effectivly and are better streamlined.
When change is effected we tend to run for the hills, instead we should embrace it. It means faster, better, more exciting things to come and in this case, more effective solutions to running a company. Therefore better structuring, economical effects will increase and those not able to comepte will have to now learn to take options which are not so soft.
Viva Telecom! Let us stop giving out intellectual wealth away to other countries, bring them here to invest. Let us work on the edge of a blade and fine tune our technology industry, it means better growth longterm.
Had a door knocker from telecom wanting my basic fixed line and broadband business- back, I left for a cheaper deal about 2 months ago.
Id bet , if I didnt leave they would wouldnt be offering a cut of $20 to the mid $70s on their previous monthly price.( plus a buyout of my current 24 month contract).
So for all out there that arent getting Telecom competing for your home line business, give them the hard word and demand at least a $20 pm cut
Due the undeniable importance of this core piece of infrastructure and that it is actually a privatised item of the national infrastructure with obvious risk to our ability to communicate internally and externally the government should be preparing itself to renationalise our asset.
This is the only way to ensure our telecommunications net work will endure.
This is yet another example of the stupidity of the privatisation agenda.
Remember The Railways, Air New Zealand, sell off of New Zealand Post Office Savings Bank, previous privatisation of Auckland Remand Prison etc etc and so forth.
I have to admit the neo-liberal free market privatisation agenda is very clever. Its win win for them (just lose lose for everyone else). You buy a public asset for much less than it took to create it in the first place. Then you run it into the ground over a number of years to extract the maximum value from that asset as quickly as possible. (Foreign shareholders are impatient, they want their dividends ASAP!). When the once proud asset is teetering on failure (Telecom is not at this stage yet mind you) but remains such a core asset that the Govt cannot let it fall over, tax payers buy it back from the private sector and have to bail it out/reinvest in the run down infrastructure with even more public funds.
The privateers get the asset cheap. They get to extract maximum value from it as they run it down. Then they get to sell it back to you the public for good $ still because even though it is a shadow of its former self, its still a critical piece of national infrastructure! Its a win win for the free marketeers/private sector interests! Money in their pocket at every roll of the dice.
Need I mention the economic damage caused by the flight of hard currency (capital) taken out of the country as “profits” in the mean time, when that capital should stay in NZ and be re-invested in productive NZ enterprises?
There’s this big question of morality in business.
Is it more moral for a company to think of it’s shareholders and thus look for ways of generating revenue with a minimum of input, or is it moral for the company to look after it’s customers?
Capitalism was meant to work by hitting companies in the pocket if they were acting in a way that was counter to their customer’s interests. However, we in New Zealand are too complacent. But even worse, what happens when that company owns such a major part of our infrastructure?
Telecom can move jobs offshore, claim it’s moral and there’s not a damn thing we could do about it. The fact that they wrapped it up into a cute piece of PR is a bit of a bonus really. It’s a bit like the whole supermarket problem (there were 3, then 2. Competition stayed buoyant for a couple of years while we became complacent and now the price of NZ cheese is more than you’d pay for NZ cheeses in Australia).
Just as there’s nothing we can do about their lack of investment and their like for the bare minimum. Telecom has become little more than another milking machine for investors (I would say foreign investors, but I’m sure there are a fair few NZ investors who only look at the dividend cheques.)
I don’t think the Government could compel Telecom to invest more or keep jobs on NZ soil even if it tried. Just as the NZ Government wouldn’t have been able to stop Fisher and Paykel from moving off shore (imagine the uproar if the Government did try to bail them out during the recession after their commitment to NZ has been appalling).
A big private company owning a huge part of essential infrastructure and the leash seems to be getting looser…
@ Nevyn, I believe that there are some little things which could be done if our politicians and bureacrats got on the ball.
Management of the movement of capital in/out of our borders for instance. Giving advantages and protection to smaller start up telecos and ISPs to spur Telecom to get a move on. Investing in improving the level of management/technical expertise and judgement in this country. Requiring that Telecom devote a minimum % of revenue to infrastructure renewal (or coming at it from the other direction, that they meet certain performance KPIs which require infrastructure investment to make e.g. to meet ever increasing minimum broadband speeds).
As for F&P: that company has made any number of significant front line operational mis-steps (I don’t have any knowldege of higher level strategic issues). Suffice to say, at least some of their wounds in terms of market share, profitability customer service and reputation have been self inflicted.
Had a quick view of Telecoms last annual report 2009 ( annualreport.telecom.co.nz)
Of their 8535 employees, 2865 earned more than $100,000. Thats 30%
What other company in NZ would have that ratio? Of course a lot of lower paid jobs are outsourced but thats amazing
The other thing was an ‘effective’ tax rate of 29%, which is pretty high as well.
So they pay good salaries and pay their taxes.
On the down side there are 3 Bermuda based subsidiary companies which I assume are used for ‘tax planning’
Does Chorus even have ALL the network assets in it? What about the local loop? In any case you are right fibre is the future – not a subsidised copper monopoly.
Labour didn’t do much with Telecom when it had the power, their performance then was really a bit of a fail.
Forcefully Nationalise Telecom. It’s the only way to stop their bull$h1t.
I notice Telecoms annual report says it gives around $50-60k per year.
Yet for 2008 ( election year)there was ‘donations’ of just over $1,000,000.
So it seems there was a budget of $1 mill for political parties that year, the numbers dropped back to normal ($50k) the following year.
Yet I cant find any listing on the register of donations for parties any amounts from Telecom for any party that exceed $10 k for either calendar years 2007 or 2008
That’s because the 4th Labour government sold it.
You’re surprised that a privately owned monopoly under-invested to boost profit?
The way things are going we’re going to get a subsidised fibre network owned by Telecom. If Telecom hadn’t been sold we’d already have a majority fibre network that would have been paid for out of it’s profits.
/agreed
We’ve been ripped off so much over the last 20 years that there’s no way that there should be any talk of paying to buy Telecom back and yet it’s what we need to do. Competition will just cost us even more and isn’t likely to reach all of NZ (the business case just can’t be made for most places).
I’m pretty sure that Telecom were one of the companies that were against the EFA that Labour put through.
Or consider private-public partnerships with regards to telecommunications infrastructure in NZ. (Use the tools of the right wing to make money to enrich our whole country – not just an elite few, to keep valuable capital within our own borders, while strengthening our infrastructure for future economic growth.)