Telstra has unveiled a “radical” overhaul of its mobile contracts in a move that will see 11 million Australians change their plans.

In another major shake-up of its business model, the country’s largest telecommunications provider announced on Tuesday that it will offer just five options to customers which can be changed on a month-to-month basis.

The shift is designed to undercut home plans from cheaper rivals, Optus and Vodafone and is part of a $2.5 billion cost-cutting scheme announced last year that will also come with 8000 job cuts and separate infrastructure assets into a new business.

Under the changes, which Telstra says will “radically simplify the company’s products and service”, customers will be able to tailor their mobile and fixed-line packages, remove excess data charges and will no longer need to be locked into a contract, in what it billed as a move towards a customer friendly era.

Customers will change according to their needs, said CEO Andy Penn. Photo: AAP

The number of core plans customers have to chose to will fall from about 18000 to 20 though customers will be able to personalise packages.

Prices for the five post-paid plans – paid at the end of the month – plans begin at $20 per month for 2GB of data and hit $100 per month for 150 GB of data. The cheapest in the mobile broadband list is $15 per month for 5GB.

Telstra chief executive Andy Penn said customers will be able to change their plans according to their needs on a month-to-month basis.

“Customers expect to be able to personalise their experiences and only pay for what they want or need,” he said.

“They also want to be able to change their mind month-to-month as their individual needs change. I am extremely proud that Telstra now offers customers that flexibility, so they can tailor their plan to suit their lives.”

“This might mean upgrading your mobile plan around school holidays, adding a sport package for footy finals season, adding international data for that overseas holiday or, for our business customers, scaling their plan with the peaks and flows of their business,” Mr Penn said.

All existing Telstra customers will have to move to the new plans as part of the overhaul, however, the company has admitted that could take longer than their goal of two years.

But ACCAN director of policy, Una Lawrence, said that the plan is far from ‘ground-breaking’.

“In many ways, this is Telstra playing catch-up with the other telcos,” he told The New Daily.

“Vodafone stopped offering leasing plans some time ago, so Telstra’s decision to also remove this option from their plans is not ground-breaking in the market.

‘We are concerned that the new entry-level price of $50 per month for a post-paid plan may be unaffordable for some consumers. This is a steep price to pay for an entry-level product and we’d expect to see price-sensitive consumers shop around to other telcos or exploring pre-paid options instead.”

Telstra’s shareholders welcomed the move with the company’s share price rising from $2.66 on June 25 last year to $3.88 on Tuesday.