Telecom Corp said it will slash around 16 percent of its workforce to reduce costs by up to NZ$110 million ($92 million), the country's biggest telecommunications group said on Thursday, warning of more to come as it restructures its ailing businesses.
Telecom (Wellington, New Zealand) said it expected to cut full-time employees to 6,300 to 6,600 by mid-year, from 7,530 at the end of 2012, as the firm struggles to compete in the broadband market.
"This is an important step to build a leaner, more agile organization with a competitive cost structure, setting us up to win in the market," Telecom Chief Executive Simon Moutter said in a statement.
The restructuring, which also includes the Australian operations of its Gen-i unit, would incur a one-off cost of NZ$70 million to NZ$80 million in the current fiscal year.
Telecom said this initial exercise would cut its payroll costs by NZ$90 million to NZ$110 million on an annualized basis, pointing to more redundancy in the pipeline.
The phone operator said it is working through the remainder of its strategic change process, with further job cuts and other one-off costs expected.
"Telecom will provide a second update once decisions are taken," the company said.
The move was expected, as Telecom competes in the broadband market with Vodafone (Auckland, New Zealand), which bought TelstraClear's operations last year.
Telecom shares were up 0.2 percent at NZ$2.325, compared with a 0.3 percent dip in the broader market.
It retained its adjusted earnings before interest, tax, depreciation and amortization guidance of NZ$1.04 billion-NZ$1.06 billion for the year, excluding the restructuring costs.
(Reporting by Naomi Tajitsu; Editing by Bernard Orr)