Not everyone inside Telstra is railing against the forthcoming revolution under Sol Trujillo and his three amigos. One executive working on the strategic review has told Crikey that Sol and his chief operating officer Greg Winn are very impressive, their knowledge of telco operations being far more profound than anyone else inside the place.
As more and more rocks get turned over, it now appears increasingly likely that more than 10,000 jobs will be shed in a major out-sourcing and restructuring program. The maintenance divisions, such as the NDC operation, are ripe for being flogged off to someone like Leighton Holdings but management are also conscious that some of these parts of Telstra are highly unionised, so industrial action appears quite likely.
For this reason, there is an emerging school of thought that it would be wise to wait until the Howard Government’s new IR laws are in place on January 1 because attempting to downsize the Telstra head count from about 40,000 to less than 30,000 will almost certainly cause industrial strife.
As we saw on the waterfront, Telstra chairman Donald McGaughie loves the cloak and dagger of big bang industrial changes. Secrecy will be important but Telstra also needs to keep the market fully informed.
For instance, on hearing this Telstra executive strongly praise Greg Winn and predict swinging cuts to the workforce, I would be inclined to buy the stock after yesterday’s 6c drop to $4.05. It is also encouraging that the strike point for Trujillo’s options and shares is being set at $4.78, a hefty 18% premium to yesterday’s closing price.