Australia's Optus To Sack 2% Of Its Workforce

SYDNEY -(Dow Jones)- Citing intense competition and cost pressures, the Australian arm of Singapore Telecommunications, Thursday said it will sack 2% of its work force.

Optus, the second largest telecoms operator in Australia behind Telstra, issued an e-mail to staff that it will layoff about 200 staff from a total of 10,000.

More precise details will be known next week, an Optus spokeswoman said.

"We are likely to remove 450 roles across the business, a combination of permanent and contract positions as well as vacancies that won't be replaced," she said.

Optus said its market share in the key mobiles sector remains steady at about 33%, with Telstra holding about 45% as the Australian market matures to the point where there are nearly as many mobiles as there are people.

"We for the last two quarters have been saying it is a very competitive market and we have to react to cost pressures," the spokeswoman said, explaining the rationale behind the work force reductions.

She wouldn't discuss the company's performance in the fourth quarter, which ends March 31. Apart from the major phone companies, Australian consumers can also choose mobile services from units of Vodafone and Hong Kong's Hutchison Whampoa.

"Optus have been making it clear for a while that in the near term the pressures on their business meant cost reduction was a clear focus," said Macquarie Equities telecoms analyst Tim Smart, highlighting the plans to shift to a cheaper head office in Sydney.

With the industry experiencing pressure on margins and slowing revenue growth, Smart said the job losses are "a consequence that's playing out across the telco industry."

"It's not specific to Optus, Telstra are going through similar sorts of things," he added.

Telstra said in November as part of its long-awaited strategic review under new chief executive Sol Trujillo that it will cut up to 12,000 staff or 23% of its full-time work force over the next five years.

Faced with a mature market in Singapore, where more than nine out of 10 people own a handphone, SingTel has spent more than S$20 billion over 10 years building a regional presence to bolster growth.

Currently, about 70% of SingTel's revenue comes from outside Singapore, with Optus contributing more than half of the group's revenue.

But problems in SingTel's regional strategy have already surfaced. In September, the company declared its first profit warning since listing in 1993, due to stiffer competition in Australia where profits have been falling.

It said that it won't achieve double-digit growth in underlying annual net profit, but added that double-digit growth remains the medium-term target.

-By Ian Pemberton, Dow Jones Newswires;
61-2-8235-2953; ian.pemberton@dowjones.com
-Edited by Paul Dekkers

(END) Dow Jones Newswires"

Posted to the site on 16th March 2006