The axing of up to 12,000 jobs at Telstra is a taste of things to come, according to federal Opposition leader Kim Beazley.
Australia's largest telco will slash up to 12,000 jobs over five years as part of a major restructure to cut costs and boost revenue.
Chief executive Sol Trujillo said the company has to act to quickly to meet the challenges posed by a market in which fixed line revenues were falling.
He said Telstra could no longer rely on its massive public telephone network to provide the bulk of its revenues, with new technologies overtaking the network and Australians moving closer to "a wireless world".
Beazley blamed privatisation and said it was a "taste of things to come."
However, Prime Minister John Howard accused Labor of "exaggerating and scaremongering".
Despite the cuts Nationals' Leader Mark Vaile said Telstra will still have to abide by its delivery service commitments to country Australia.
Vaile said he expected any redundancies to take place through natural attrition within Telstra.
He said while job cuts were regrettable, they might be a reflection of the change Telstra had to go through to accommodate new technologies.
"It's a company that needs to operate its affairs in the interests of the shareholders and at the same time as providing services to all Australians and according to the laws of the land," he said.
"I'm not condoning the announcement that Telstra has made with regards to the workforce, but we need to understand that many businesses are changing their shape and form."