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UPDATE 2-Australia's Telstra writes down legacy IT assets, speeds job cuts

Published 29/05/2019, 11:09 am
© Reuters.  UPDATE 2-Australia's Telstra writes down legacy IT assets, speeds job cuts
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* Telstra said it will book A$500 mln asset impairment

* Company brings forward A$200 mln in restructuring costs

* Shares edge up amid weaker broader market (Writes through with management quotes)

SYDNEY, May 29 (Reuters) - Australia's largest telco Telstra Corp TLS.AX said it would book a A$500 million ($346 million) writedown on ageing data-storage assets and forecast higher restructuring costs this year as it expedites a plan to slash jobs.

The firm is in the midst of an overhaul and is cutting a quarter of its workforce, struggling like other incumbent telcos to find a way forward at a time when cut-throat competition and new technology is crushing its mainstay fixed-line businesses.

The charges come with Telstra expecting annual earnings and margins to drop, as a government-owned fibre network, which it must pay to use, replaces a copper system it had monopolised.

"It's a consequence of reshaping our business," Telstra CEO Andy Penn said on a conference call with analysts on Wednesday, referring to the new state-owned network called the NBN.

"These changes are challenging and they're tough and they're difficult for our people but if you look at it in the broader context of the telecommunications market it can be understood in terms of how that work is shifting from Telstra to the NBN."

Telstra said it wrote down its legacy IT assets, mostly customer data-storage hardware and software, after upgrading its systems. It expects to book a A$500 million non-cash charge.

The company announced its job-cut plan last June and on Wednesday said it will have shed about 6,000 roles by the end of the financial year to June, bringing forward A$200 million in restructuring costs.

Restructuring charges for rest of its strategic reset will be about A$350 million and will fall after the current financial year.

Telstra shares rose 0.5% in early trade, in a falling broader market .AXJO . ($1 = 1.4449 Australian dollars)

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