People pass a Telstra phone booth on a street in Sydney in August 2016. Australia's dominant telecom plans to split its mobile and infrastructure assets into separate firms. Photo: AFP/ Peter Parks

Australia’s largest telecommunications firm Telstra has announced plans to split in two, separating its infrastructure and mobile divisions.

The group’s fixed-line assets will be put into a wholly-owned subsidiary called InfraCo.

Chief executive Andy Penn said the telecom giant plans to shed about 8,000 jobs – a quarter of its workforce – over the next three years. One in four executive and middle management were expected to go.

The group aims to cut its costs by a further A$1 billion (US$750 million) a year, Penn said.

“We are now at a tipping point where we must act more boldly if we are to continue to be the nation’s leading telecommunications company,” he said in a statement.

The infrastructure company will control all of Telstra’s fixed network infrastructure, such as data centers, non-mobile-related fiber networks, copper, HFC cables, international subsea cables, plus exchanges, poles, ducts and pipes.

InfraCo will sell its services to wholesale customers and NBN Co, the national wholesale open-access data network. The subsidiary is expected to have an initial book value of around $11 billion.

The cuts come less than a month after Telstra said its 2017/18 earnings were likely to be at the bottom of its guidance range of A$10.1 billion to A$10.6 billion, blaming increasing competition in mobile and fixed broadband. The warning sent its shares tumbling to a more-than six-year low of A$2.71, AFP reported.

Telstra employs 32,000 people across 20 countries, according to its most recent annual report. Penn said the company had to take action to stay on top in a highly competitive market.

“The rate and pace of change in our industry is increasingly driven by technological innovation and competition. In this environment traditional companies that do not respond are most at risk,” he said.

With AFP 

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