It is Telstra's big bang. A revolution far in excess of what was expected.

However, judging by the market's initial reaction, Telstra chief executive Andy Penn was left holding the hand grenade as he threw the pin at the company's eagerly anticipated strategy day.

Brokers were swamped with sell orders even before the ASX opened. Shares tumbled by around 5 per cent in a broader market heading strongly in the other direction.

That is another $1.7 billion in value vaporised, bringing the total paper loss to almost $40 billion since Mr Penn took over almost three years ago — a period during which the share price has more than halved.

Shrinking to grow is a phrase very much in vogue in business at the moment. Destroying shareholder value is not.

Telstra is not only shrinking. It has scythed itself in two, while slashing jobs and the products it will sell.

This cost-cutting has not been done with surgical precision. Mr Penn has taken the chainsaw out.

Eight thousand jobs, or one in every four workers, are slated for the exit in the next four years.

That is way ahead of what now appears to be a timorous 2,800 jobs shed in the past two years.

The cuts are aimed at lopping 30 per cent of the labour costs out of the company.

It is nothing new at Telstra, where staff numbers have been cut nearly every year for more than a decade. By 2022 Telstra will have fewer than half the jobs it had 10 years ago.

Any winners?

With staff fretting about their futures and investors angry as well, has Mr Penn pleased anyone — in the short term at least?

He's hoping consumers will jump aboard his new streamlined product line.

Stripping down the number of plans on offer from 1,800 to just 20 and eliminating such frustrations as excess data charges will either cost the company — or depending on your perspective, gift customers — around $500 million a year.

Mr Penn said that "lost" $500 million would be offset by new customers flooding in the doors. Well, that's the plan.

That downward pressure on prices is very much behind the share market rout.

Telstra's earnings guidance fell well below where the market thought it would be.

Telstra's call on pre-tax earnings next year is between $8.7 and $9.4 billion. The market had pencilled in $10.5 billion.

That's largely due to Mr Penn's gloomy forecast of an ongoing decline in the mobile market, with revenues tipped to fall by up to 3 per cent next year.

So rather than focus on a post-2022 world where the NBN is fully rolled out as Mr Penn had hoped, predictably short-termism prevailed.

Through the hours of management-speak at the strategy day, it appears the market only heard its pre-conceived idea that all Telstra's business was under an intense structural pressure it could do little about.

So what is the big picture?

The "productivity increases" announced on Wednesday are targeted to increase annual savings by another $1 billion on top of the $1.5 billion program announced two years ago.

Saving the $2.5 billion is intended to mitigate the $3 billion NBN revenue "black hole" Mr Penn identified two years ago.

Faced with NBN's massive disruption to Australia's telecommunications market, Telstra has massively disrupted itself and its legacy business.

At face value the plan ticked a lot of the boxes the market wanted.

The extra $1 billion cost-cutting was right at the top end of expectations.

Fixing up the cumbersome offering of products. Tick.

A promise to lead in the 5G mobile roll out. Tick.

Separating the infrastructure business from retail operations and potentially boosting shareholder equity by up to 50 per cent was a surprise.

Splitting the company in two

The most radical, yet perhaps obvious idea tabled by Mr Penn was the split.

While it means next to nothing for Telstra's customers, it could yet be the plan that pulls the company out of a steady march downhill.

The so-called InfraCo will be a substantial business in itself — $11 billion in assets, sales of $5.5 billion and pre-tax earnings of around $3 billion.

On JP Morgan numbers it could boost shareholder value by up to 50 per cent, but not for some time.

It will sit inside Telstra, albeit as a separate company, at least until the NBN roll-out is completed in 2022.

After that, it might be spun out, it might seek a co-investor and in time it might be well positioned to have a crack at buying a privatised NBN.

It is also a development that would more than tweak the Federal Government's interest.

It would love to get rid of the $74 billion broadband ballast it has weighing down its political fortunes and deliver an outcome that should have been delivered at the outset of the NBN.

So while workers and investors may be ruing Telstra's "big-bang" announcement, the likely legacy of Mr Penn's plan is not likely to be known for years, well after he has left the company.