Hungarian Telephone and Cable Corp. Announces Workforce Reduction/Marketing Initiatives
August 31 2005 - 12:11PM
Business Wire
As part of its continuing effort to integrate the businesses of its
Hungarian operating subsidiaries (Hungarotel and PanTel) to
maximize synergies and extract additional cost savings from the
PanTel acquisition, Hungarian Telephone and Cable Corp. (AMEX:HTC)
announced today a workforce reduction plan and new marketing
initiatives. Following a review of the size and composition of its
workforce, Hungarian Telephone has agreed with the Hungarian Trade
Unions representing most of its Hungarian-based employees on the
key provisions of a workforce reduction plan. Hungarian Telephone
will reduce its workforce by approximately 200 employees, which
represents about 20% of Hungarian Telephone's workforce. The first
step in the process will consist of an offer to employees to
voluntarily accept a severance package. If the first step does not
meet its target of 200 employees, Hungarian Telephone will take the
next step in the process to complete its workforce reduction.
Hungarian Telephone expects to complete its workforce reduction by
the end of the year and estimates that the one-time costs
associated with the workforce reduction will range from 600 million
to 1 billion Hungarian Forints (U.S. $3-5 million), which costs are
payable in cash in 2005 and will affect Hungarian Telephone's 2005
reported results. The exact costs of the workforce reduction are
dependent on the final composition and seniority of the affected
employees as well as the timing of the full implementation of the
workforce reduction process. Hungarian Telephone's estimates the
future annual cost savings to be around 500 million Hungarian
Forints (U.S. $2.5 million). Hungarian Telephone also announced
that it would use the PanTel brand name to market all of its
services throughout Hungary. In Hungarotel's existing, historical
concession areas, Hungarian Telephone will continue to use the
Hungarotel brand name for its existing residential customer base.
However, Hungarotel's business and institutional customers will be
transferred to PanTel in a process that should be completed by the
end of 2006. COMMENTS FROM TORBEN V. HOLM Commenting on the
workforce reduction plan, Torben V. Holm, President and Chief
Executive Officer stated, "With the increasingly fierce competition
in the Hungarian fixed telephony markets, it is imperative that we
streamline our operations to achieve the necessary long-term cost
efficiencies which will enable us to compete in this marketplace. I
want to thank the Trade Unions and Workers Council for their
cooperation and efforts in this workforce restructuring." ABOUT
HUNGARIAN TELEPHONE AND CABLE CORP. Hungarian Telephone and Cable
Corp. is the leading alternative telecommunications service
provider in the Republic of Hungary with a presence in other
countries in Central and Eastern Europe. Note: This press release
contains forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. These and all
forward-looking statements are only predictions or statements of
current plans that are constantly under review by the Company. Such
statements are qualified by important factors that may cause actual
results to differ from those contemplated, including as a result of
those factors detailed from time to time in the company's
Securities and Exchange Commission filings. The foregoing
information should be read in conjunction with the company's
filings with the U.S. Securities and Exchange Commission including,
but not limited to, reports on Forms 10-K and 10-Q. The company has
no obligation to update or revise these forward-looking statements
to reflect the occurrence of future events or circumstances.
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