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Topic # 114522 22-Feb-2013 12:22 Send private message

I just received a leaked memo, purportedly sent by Telecom CEO Simon Moulter to Telecom employees:


Hi everyone,

This morning we announced our half-year results for the period July to December.

While comparisons are complicated by the Chorus demerger, on an adjusted basis we achieved a slight improvement in earnings as reduced operating costs and changes to Chorus trading arrangements more than offset a decline in operating revenue. We achieved good growth in new mobile customers since closure of the CDMA network, and consolidated our broadband market share, but the result underlines that we face fierce competition across all our business units. We had to provide guidance to investors that our earnings outlook for the second half of the financial year is soft due to revenue and margin pressure across most of our product lines and market segments.

It was good to see so many of you at my sessions in Auckland and Wellington last week. If you couldn’t make it along, you can see it here.

I’m hoping you took away that our most immediate challenges are the need to simplify our business fast, and to reduce our cost base even faster.

We can’t continue with the legacy approaches associated with our past as a traditional telco. Our operating structures and processes are still highly complex. They’re a big reason why we have significantly higher operating costs, and employ more people, than our competitors in both telco and ICT.

This complexity and higher cost base means we’re literally not competing on a level playing field. Right now, we can only match our competitors on price at the expense of our margins and that’s not sustainable. We’ve also got to make some tough decisions about what business areas we will operate in, and those that we won’t anymore. We must address these issues up front to succeed in today’s fast-changing marketplace.

I see no sense in waiting until next year, or the year after, to sort all this out.  As I get around the company I hear you loud and clear when you say you want me to make the big decisions and just get on with it.

So, what does ‘getting on with it’ look like?

I’ve charged each member of my leadership team with getting their business unit fighting fit to implement our new strategy as soon as possible – that means over the next few months. I’ve told them to question everything we do, then decide what’s right for their business unit and for the group, as we realign for the future.

This will mean changes right across the business and will very likely impact all of us in one way or another. For example, I’ve asked for a full rethink of the performance review process and STI scheme as I don’t believe it’s right for what we need. We all need simple and clear incentives, and far less red tape and bureaucracy in our performance management systems.

I wasn’t surprised one of the most common responses I got over the past week was: “nice rhetoric, but what’s actually different this time?”. What’s different is I’m not going to be the guy who starts down this path and then doesn’t complete the job. The other common question was about how many people stand to lose their jobs. We’re simply not in a position to talk numbers today - we need to do more work before we can share that level of detail. However you will hear more from me over the coming weeks, as well as from your business unit leaders.

As part of our results announcement, we’ve signaled publicly that we’re moving quickly to implement far-reaching changes in our business. I expect this will attract plenty of media coverage and commentary, together with the usual dose of journalistic speculation.

I’m not going to try to downplay the likely scale of these changes, nor sugar coat the impact it will have on many of you. But as much as I’m allowed to under stock exchange disclosure rules, I promise to keep talking to everyone within Telecom first about what we’re doing, why we’re doing it, and how it might impact you. I also reiterate the commitment I’ve made to getting to the future - fast, fairly and fearlessly.

Simon 




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  Reply # 767573 22-Feb-2013 12:34 Send private message

We can’t continue with the legacy approaches associated with our past as a traditional telco. Our operating structures and processes are still highly complex. They’re a big reason why we have significantly higher operating costs, and employ more people, than our competitors in both telco and ICT.


I can see a push towards selfservice coming

e.g On Vodafone and 2degree's website you can setup your own number port, whereas on Telecom you need someone to set it up for you

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  Reply # 767583 22-Feb-2013 12:43 Send private message

Telecom probably haven't adjusted to the fact that they are no longer a monopoly. 

There are likely to be many staff 'coasting' on sweet deals. A while ago I heard some figure about the number of Telecom people on over 100k and it was really high. 

I'd be pretty scared being a middle manager at telecom just now. 

Although, some people will be looking to jump ship before the big redundancies. 









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  Reply # 767592 22-Feb-2013 12:54 Send private message

DjShadow: I can see a push towards selfservice coming


I see a lot of work for computer geeks coming simplifying and replacing old computer systems. 

If it was easy to put in self service they would have done it ages ago.

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  Reply # 767598 22-Feb-2013 13:00 Send private message

Business self service is already there. Cost Manager move would be complete by now I imagine.

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  Reply # 767610 22-Feb-2013 13:09 Send private message

No mention of a leak, but media reporting it now.

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  Reply # 767612 22-Feb-2013 13:12 Send private message

Telecom are in many ways burdoned (but some may argue because of their own decisions) with costs that other companies don't have. They've moved from being a vertically integrated provider to now being a retail provider, but still have massive infratructure such as the NEAX's that form the core of the New Zealand PSTN.

The NEAX's still form the basis of interconnecting the vast majority of calls inside NZ, even those between providers where Telecom isn't even a party. There is also a significant amount of infrastructure tied up in providing 111 services.

You un fortunately can't replace a network such as this with an off the shelf VoIP solution overnight..


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  Reply # 767626 22-Feb-2013 13:28 Send private message

""Without sugar-coating it, job cuts will run into the hundreds," Mr Moutter CEO Simon Moutter said on a conference call."

http://www.nbr.co.nz/article/telecom-reports-line-profit-result-ck-136294

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  Reply # 767760 22-Feb-2013 16:25 Send private message

I think that the Telecom workers should join the same union as school teachers. This way when job cuts are announce to could march in front of the media and abuse the management and still have all their jobs..




Regards,

Old3eyes

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  Reply # 767783 22-Feb-2013 17:08

sbiddle: The NEAX's still form the basis of interconnecting the vast majority of calls inside NZ, even those between providers where Telecom isn't even a party. There is also a significant amount of infrastructure tied up in providing 111 services.

You un fortunately can't replace a network such as this with an off the shelf VoIP solution overnight..



About 14 years now and still counting.

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  Reply # 767789 22-Feb-2013 17:19 Send private message

Heard that kind of message every year I worked there.
Cashed in on the redundancy and working happily else where.
Trouble with TNZ is they get rid of all their good staff, (they cost too much) and then need 2-3 other people to do the same job.
IT systems being automated and reducing costs are pipe dreams EDS, HP, ALu and many others have happily extracted huge consultancy fees out of TNZ. Result no fundamental change for the customer or the people who work on the first line and have to put up with it.
I feel sorry for those people the most, I really hope Simon and his massive middle management team delivers this time!!

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  Reply # 767793 22-Feb-2013 17:27 Send private message

Jobs cuts are to be expected, as people expect cheap services these days, and there is far more competition. It also means that many people will move to other ISPs that are growing.
They do have a large number of staff on over 100k. It is in their shareholder reports.

gzt

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  Reply # 767800 22-Feb-2013 17:37 Send private message

I wasn't surprised one of the most common responses I got over the past week was: 'nice rhetoric, but what's actually different this time?'. What's different is I'm not going to be the guy who starts down this path and then doesn't complete the job.

Something tells me that question was about working with employees and acting on innovative solutions for the challenges Telecom is facing and has faced for a while now. Ie; Not how many job cuts would be actioned.

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  Reply # 767801 22-Feb-2013 17:38

It seems no amount of profit is enough in this day and age!

A glorified utilities company can make a net profit of $156 million for six months and still feel the need to trim the fat!

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  Reply # 767804 22-Feb-2013 17:44

IIRC Rod Deane's vision was for Telecom to be a corporate head office under 2000 staff with the rest outsourced.

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  Reply # 767805 22-Feb-2013 17:45 Send private message

wakaridnnz: It seems no amount of profit is enough in this day and age!

A glorified utilities company can make a net profit of $156 million for six months and still feel the need to trim the fat!


They aren't any longer, Chrous was separated, so is no longer part of the business.  They are now just an ISP like many others. They are no different from any company that has to answer to their shareholders. Businesses have to make profits, and they also should increase and grow otherwise you are going backwards. Also considering what the shareprice was prior to regulation, the shareprice is less than half what it once was.

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