Telecom is not ruling out even more staff cuts after today confirming the axing of up to 1200 jobs.
Staff at Telecom's main hubs in Auckland and Wellington will bear the brunt of job cuts that industry observers describe as inevitable.
The country's biggest telecommunications provider says the losses are a part of the transformation from a network builder to a customer focused retailer and the job cuts are part of a plan to reduce payroll costs by up to $110 million annually.
Chief executive Simon Moutter said the company is shifting its focus from building networks to becoming a data-driven and mobile-focused telecommunications operator.
Paul Brislen from the Telecommunications Users Association of New Zealand says over the years Telecom has become an inverted pyramid and "there are just far too many people at the top earning far too large a salary for the size of the company".
Moutter says fewer staff will make the telco a more nimble competitor.
"We have to take our cost base down so we can continue to perform to deliver the services customers want and have a profitable and sustainable business," Moutter said.
But Brislen warns the job cuts could work against the company.
"If Two Degrees or Vodafone launches something that is unexpected their ability to react might be somewhat diluted whilst they're distracted by all of this internal working," he said.
Labour shortage in ICT
Around 130 jobs have gone in Australia, the rest - up to a thousand here - will go by June.
The redundancies come in the face of a labour shortage in ICT in New Zealand but experts say the sector needs engineers and software specialists, not the middle managers being laid off by Telecom.
And while the Government holds fast to its view that there are plenty of jobs available in the sector, Telecom would not be drawn on further cuts this year.
Moutter said it is a fast changing industry and the company has to go along with the changes that occur.
The Greens say the layoffs highlight the need for a Government strategy to boost the ICT sector.
ICT spokesperson Gareth Hughes said the job cuts will be devastating for the workers and their families, as well as their communities. He predicts many of the skilled workers will leave for Australia in search of stable work and higher pay.
How will the cuts work?
Staff levels will be reduced by a combination of not hiring new people, transfers, and voluntary and involuntary redundancies.
Roger Coulter from Craigs Investment Partners told ONE News at Midday that Telecom's statement has given "greater clarity" in regard to their plans.
"With this announcement, although we got greater clarity, most of it was pretty much anticipated.
"Simon Moutter is clearly focused on being competitive at the cost level as well, and really just repositioning the business for what the telecommunications industry might look like over the next five years or so," he said.
Telecom also said that it expects the impacts of resetting the scope of Gen-i Australia and downsizing costs in New Zealand will "incur one-off restructuring costs of $70 million to $80 million in FY13".
At the end of December 2012, Telecom had 7530 employees, accounting for around 17% of New Zealand's 44,400 information, media and telecommunications staff in the December household labour force survey.