What impact will Telstra’s business cutbacks have on customers?

Telstra’s decision to overhaul its business model and cut thousands of jobs has sparked concerns among analysts about potential price increases for its services. Chief executive Vicki Brady announced the restructuring on Tuesday, revealing that 2,800 jobs would be eliminated to streamline operations and reduce costs.

The move away from the current pricing model, which linked price increases to the Consumer Price Index (CPI), could lead to changes in the cost of Telstra’s products. While the company has promised transparency in its new pricing strategy, analysts warn that customers should not expect automatic price cuts.

One analyst noted that Telstra may need to raise prices or increase subscriptions to maintain profitability, especially as its other business segments are not significant revenue contributors. The flexibility in pricing could allow Telstra to adjust prices based on market conditions and customer needs.

The announcement has also had an impact on Telstra’s share price, which dropped by 2.72% on Tuesday. Analysts believe that the market was expecting a price increase linked to CPI, and the decision to scrap this model may affect Telstra’s bottom line in the short term.

The Australian Competition and Consumer Commission (ACCC) has also expressed interest in monitoring Telstra’s pricing changes to ensure compliance with consumer and competition laws. The ACCC will be closely watching any adjustments to NBN pricing and other products to protect consumers from cost increases.