NBN Co surfs layoff wave, cutting 500 staff to ‘simplify’ as competition grows

The ongoing wave of tech layoffs is buffeting NBN Co, which announced this month it will lay off 500 people as the company adjusts its operational and funding strategies to accommodate a climate of increasing competition and intensifying borrowing pressure.

The company, which has built and operated the National Broadband Network (NBN) since 2009, will change the “size and shape of the company” by cutting around 10 per cent of its workforce, reports said.

Although CEO Stephen Rue was upbeat in the company’s recent half-year results announcement – flagging an expanding customer base and continued take-up of high-speed services that boosted half-year revenues to $2.63 billion – he warned in a recent email to staff that Australia’s telecommunications “environment is changing” and that the competition NBN faces to win and retain customers is intensifying.”

Flagging “the continued improvement of our products and simplification of our systems,” Rue noted that “a financially stable and sustainable NBN means we are able to continue our important investment in the network” – even as the staff cuts were announced in a push to “simplify” the company and make it “more commercially and operationally efficient.”

“All business units” will be affected, with most of the affected roles to be middle and senior management – prompting speculation that the company was entering a “death spiral” and driving RMIT University academic and industry analyst Dr Mark Gregory to flag the network as “a national disappointment” that is “over-priced and under-performing for what Australia needs.”

Yet while the layoffs echo the growing wave of tech industry layoffs that have seen tech giants shed thousands of jobs, the news isn’t all bad for NBN Co: despite taking a scythe to its management, NBN Co is set to simultaneously expand its team of field technicians to support the recently announced $2.4 billion national fibre upgrade program.

That program will see the NBN Co fibre-optic network expanded, with recent announcements flagging its extension to over 1 million households – including over 660,000 regional premises – as the company works to shift demand away from its congested fixed wireless broadband and satellite networks, which face threats from the likes of Elon Musk-backed satellite broadband service StarLink.

Navigating a period of adjustment

The layoffs come as NBN Co revisits its financial and fund-raising strategies in the wake of a Productivity Commission report that warned the former Coalition government’s multi technology mix (MTM) rollout strategy had created so many “unanticipated costs” that it had left the company with “poor prospects” to ever repay its debts.

Having been rebuffed by the government in its efforts to increase broadband prices, NBN Co has been looking for other ways to grow its business while streamlining expenses.

A recently announced “game changer” Master Developer Agreement with Western Sydney International (Nancy-Bird Walton) Airport, for example, reflects NBN Co’s play to win new markets away from infrastructure competitors.

In a time of increasing market uncertainty, NBN Co is also leaning on its recent renewable investments to secure additional funding – recently tapping its expanding environmental cachet to secure $2.1 billion (€1.35 billion) through an issuance of European Green Bonds.

“We are delighted to see NBN’s sustainability credentials tested and validated on the world stage from the global investor base,” NBN Co executive general manager group treasurer Fiona Trigona said, noting the company’s efforts to “embed sustainability across the company’s activities.”