Telstra is set to cut up to 2800 jobs, approximately 9% of its 31,000-strong workforce, as part of a strategic plan to save $350 million by the end of the 2025 financial year while upscaling its AI capabilities.

The announcement, made via an ASX update on Tuesday morning, indicated that most of the layoffs would occur by the end of 2024, with consultations on 377 positions commencing immediately.

CEO Vicki Brady attributed the cuts to a reset in Telstra's Enterprise business. "These changes are necessary for us to make the investments needed to support growing data volumes and improve connectivity across the country," Brady claimed.

The decision follows Telstra's February announcement about expanding in-house generative AI solutions, which showed promising results in pilot programs with frontline employees.

James Perkins, National Assistant Secretary of the Communication Workers Union (CWU), expressed concern over the impact on services.

"You can't slash thousands of jobs without seriously impacting service delivery. Telstra must address this," Perkins said.

Treasurer Jim Chalmers also commented on the situation, expressing sympathy for those affected.

"This is a very distressing day for many families. We need to ensure that service quality doesn't suffer due to these changes," Chalmers stated, noting that advice would be sought from the ACCC regarding Telstra's new pricing strategy and the role of the NBN.

Brady defended the job cuts, citing high inflation and energy costs as contributing factors to the company's cost pressures. She assured that affected employees would receive "industry-leading" redundancy packages, including six months of career transition support.

In addition to job cuts, Telstra's directive outlined other cost-saving measures, including the deployment of its Global Business Service function and actions to reduce non-labour and indirect labour costs.

The company expects to incur restructuring costs between $200 million and $250 million over the 2024 and 2025 financial years, covering redundancy payouts above ordinary costs.