Further job cuts loom in telecommunications sector

Spark has started a consultation process with staff. Photo / Dean Purcell

Competition forces Spark to join fellow telco Vodafone and lay off workers.

An industry analyst says he is expecting further job cuts and restructuring in the telco sector in the coming months.

Forsyth Barr analyst Blair Galpin said Spark had hinted after a restructure last year there could be more job cuts, and said the latest round would likely be followed by more in the coming year or so.

"We're of the view that there will be quite a bit of restructuring, and that what Spark did last year was really the back end functions," Galpin said. "They still have to review the front end functions, and that does require a transformation so we expect to see some further redundancies over the next 18 months as they complete more stages of their transformational work."

Spark has confirmed that a consultation process was started last week to cut a number of jobs in a section of the company to improve efficiencies.

Spark spokesman Andrew Pirie said the company would cut a number of jobs in its "Connect" technical department, but would not comment on exact numbers, other than to say rumours it would be around 400 or up to 20 per cent of the team, were well off the mark, adding the exact number would be "a lot, lot lower" than that.

"We informed staff on Monday that there would be some job losses but I can't comment on the exact number other than to say that the rumours of it being around 400 are completely misguided, and that it will be nowhere near that high," Pirie said.

"We're just starting to go through the consultation process, and talking about the changes that are going under way there now."

Pirie noted the company would be doing its best to minimise the number of staff affected. The news comes on the back of a statement from Vodafone on Tuesday that the company would be looking to cut up to 250 of its permanent staff as well as a significant number of its contractors by March.

Galpin said he was not surprised by the moves.

"It's not unexpected it's what normally happens with these things," Galpin said.

"In Spark's case it's sort of a transformation and the other is an integration so you usually have a bubble of cost for a while before it smooths out. There had been a lot of cost associated with [Vodafone's acquisition of TelstraClear] so I think they're trying to look at how they can change that around."

Both companies stated increased demand for low prices and competition as major pressures in their decisions to cut jobs.

"The market place continues to be extremely competitive, we've got all our customers continually demanding better value and lower prices and we have to respond to that," Pirie said.

"And that means there's a constant challenge to be as efficient as we can be, and that's the reality of today's world and we're not any different to any company having to make those sorts of choices."