TELSTRA workers are bracing for deep job cuts as the telco giant prepares to announce its biggest structural shake-up in a decade.

The majority of the cuts, to be announced within weeks, are expected to come from the waning fixed-line business as customers continue to embrace smartphones.

In an internal memo, Telstra chief operations officer Brendon Riley told staff yesterday that the business model for the operations division was not sustainable.

The division covers fixed-line services. Telstra chief David Thodey has told BusinessDaily the fixed-line business is bleeding up to $300 million a year.

The ever-growing demand for data from mobile devices now drives the bottom line for the nation's biggest telco.

"Our traditional businesses are coming under increasing margin pressure and the largest portion of our budget is spent supporting them," Mr Riley said in the memo, seen by BusinessDaily.

"This is not a sustainable business model and we have an obligation to redefine our contributions to Telstra.

"We must evolve if we are to continue supporting the company's future needs - we need to redistribute our priorities, expenditure and investment."

The new operating model will come into effect from July. Acknowledging there would be job cuts, Mr Riley later told journalists there would also be new work created in "aggressive growth" areas including network application and services, wireless and NBN offerings.

But he anticipated the telco's head count would fall overall.

Mr Riley said exact numbers were still being "thrashed out". About half the telco's domestic workforce of 30,000 will be subject to the review of operations.

Under the changes to the operations division flagged, the number of business units will be cut to five.

"These will be some of the more substantive changes in this business over last 10 years or so," Mr Riley said.

There will be three new units - IT Solutions, Networks and Customer Service Delivery.