news National broadband provider iiNet has reportedly kicked off a round of redundancies, as rumours swirl about a staff rationalisation in the wake of its Internode and TransACT acquisitions.
Earlier this week Delimiter received a tip from an unverified source that iiNet was conducting a round of redundancies at Internode and TransACT; competing broadband providers which it acquired over the past 12 months. iiNet chief executive Michael Malone wouldn’t comment on the changes to Delimiter, but told News Limited publication PerthNow that the cuts were slated to hit Canberra-based TransACT, with 30 staff to go due to “some duplication of roles”, but TransACT’s help desk staff numbers being doubled in order to boost customer service levels.
TransACT chief executive Ivan Slavich last week additionally told the ABC that some nine staff had been made redundant by that stage, with more to go by the end of June. The cuts were coming from areas which were duplicated across the iiNet Group — administration, secretarial, legal, marketing and so on. Most of the staff are finding new roles.
There has been no confirmation of job cuts at Internode yet, but there have been substantial changes in the organisation’s executive line-up since iiNet bought the company in December last year. In late May, long-time Internode managing director Simon Hackett signalled his intention to leave his formal executive role at Internode and instead take up a role on the board of Internode’s new parent iiNet.
Hackett’s move to leave executive duties at the company he founded several decades ago in Adelaide comes as part of a wider restructure that will leave the ISP without formal leadership within the broader iiNet Group. Internode’s low-profile chief executive Patrick Tapper will leave the company at the end of July in order to move to Queensland and spend more time with his family. In addition, Internode’s general manager Business and Government Daryl Knight will now take on this role for the entire group, reporting to Greg Bader, CEO of iiNet Business.
In its statement announcing the changes, Internode made no mention of a process to replace either Hackett or Tapper, meaning the company will shortly have no formal independent executive leadership of its operations.
It’s not the first time iiNet has quietly gone through a round of redundancies. In February 2011 the company is believed to have made about 60 staff redundant, with a number of middle and senior management roles getting the chop. “As a result of our rapid growth and recent acquisitions, it is only natural that the staff structure is reviewed,” an iiNet spokesperson said at the time. “Following this review, a small number of staff, mainly in head office functions, and across the iiNet group have been offered a redundancy.”
Like the current round of cuts, those cuts came after iiNet snapped up a number of competitors. In July 2010, the telco bought AAPT’s consumer division for $60 million, and in March that it was Netspace. Those two acquisitions, which were seen as bringing a substantial degree of consolidation to the local broadband market, followed the company’s buyout of fellow Perth-based ISP Westnet in mid-2008. In addition, in mid-2009, news broke on the forums of broadband information site Whirlpool that iiNet had conducted a round of redundancies. The telco also didn’t disclose numbers at the time.
iiNet has never ruled out some level of job losses following acquisitions; generally stating that the situation would be broadly ‘business as usual’, but that some level of staff rationalisation may occur down the track.
Update: This afternoon I received the following statement from iiNet:
The iiNet Group, including Internode and TransACT is growing. Overall we’re expanding our workforce and investing in key service areas to continue leading the market with innovative products and award-winning customer service.
Over the coming months, more than 50 extra customer service staff will be recruited to further strengthen our leading customer service team and prime the Group for future growth. The move will also ensure that the same high standard of service is provided to all our customers.
We’re continuing to make significant capital investments across the Group and in 2012 alone will spend over $50 million. For example, we’re undertaking infrastructure work across the business to offer a wider range of products to all of our customers. We’re also investing in enhanced customer and corporate systems to contribute to improved service for our residential customers. While this reduces system related costs for the business, it also allows us to develop new service offerings for customers.
We continually review our Group structure to ensure we’re focussed on key growth and service areas. As part of this process, a small number of duplicate positions have recently been made redundant across the business, primarily in Corporate functions. Further changes will be minimal and are expected to occur through natural attrition. We’re working to ensure our staff and resources are placed where they are needed most across the Group. This will enable us to pass on operational cost savings to customers through better value products and bolstered customer service teams.
These job cuts are more or less expected; most companies which have made the sort of large acquisitions which iiNet has made will go through a small number of job cuts due to the duplication of roles. And with the losses not being major, it is unlikely that iiNet would be required to disclose them to shareholders in the form of an ASX announcement.