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Telecom takes $75 million restructuring hit, cuts workforce 15%

Following its half-year announcement that the company would restructure to cut costs, New Zealand-based Telecom (ASX: TEL) revealed some of the financial and fundamental details in a press release (link opens in PDF) today.

The company will take a $70 million to $80 million one-off hit for FY 2013 to account for “resetting the scope” of Gen-i Australia and downsizing its New Zealand operations. As a result, Telecom will lay off around 1,000 workers to reduce its overall full time equivalent workforce to approximately 6,500.

Although Telecom warns that it will book more one-time charges as additional business operations close down, the corporation believes that this restructuring will ultimately benefit Telecom and its stakeholders.

In a statement released today, CEO Simon Moutter notes that: “This is an important step to build a leaner, more agile organisation with a competitive cost structure, setting us up to win in the market.”

The release notes that estimated revenue impact and savings are “uncertain” for many of its decisions, but that payroll savings alone should cut costs by $90 million to $110 million per year. As of now, FY 2013 guidance remains at $1.04 billion to $1.05 billion, excluding the one-off restructuring cost.

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