Telstra scraps over 300 management jobs, but could a share buyback be on the cards?

Telco giant Telstra will shed over 300 management jobs in the coming weeks as part of a move to simplify the company’s internal structure and reduce red tape.

The move comes as a Morgan Stanley analyst has said in a research note Telstra could initiate a 30% share buyback scheme due to its recent deal with the National Broadband Network, which will provide it with billions for selling copper networks.

The job cuts, which will affect about 30 senior executives and directors, and about 300 from middle management, are also part of an effort to reduce costs as many hold six-figure salaries.

“These changes are about making our business simpler, removing duplication and increasing the speed of decision-making,” a spokesperson told SmartCompany. “All of the changes are intended to make processes simpler for our front-line staff, enabling them to make things happen faster and serve customers better.”

The decision to cut these jobs also comes after the Communications Electrical and Plumbing union said earlier this year 900 jobs would be shed from the company’s ranks during 2010.

The move also comes as a number of senior executives have left over the past year since chief executive David Thodey took over from Sol Trujillo. Consumer chief David Moffatt left about six months ago, while product management chief Holly Kramer left last November.

International retail chief Drew Kelton has also resigned during the past year, while National Broadband Network negotiator Geoff Booth also departed last month.

The latest staffing decisions have been reportedly issued by current strategy head Robert Nason, who was hired late last year to address the company’s customer service performance. He has introduced a number of internal programs to help simplify business processes and customer service issues.

Meanwhile, Morgan Stanley analyst Mark Blackwell has written in a note to clients that Telstra could embark on a 30% share buyback using the $11 billion it will gain from the NBN deal. Falling contact subscriptions and loss of market share in broadband and mobile services would be the catalyst for such a deal, he says.

“The key to this result is a 30% buyback, funded with strong operating cashflows augmented by $11.5 billion of estimated NBN settlement proceeds and fixed line caped savings,” Morgan Stanley analyst Mark Blackwell wrote in a recent note to clients.

“Dividends and capital growth would thus provide a (greater than) 10% total shareholder return annually for the next decade.”

The firm has incorporated a 5% annual buyback into base-cast forecasts from 2012-2019, with EPS and total return to shareholders above 10% per year. It claims the company could produce $48 billion of total free cashflow over the next 10 years, with $33 billion to be put towards an increased dividend.