By Sean Carney
PRAGUE--Czech Telefonica AS (BAATELEC.PR) plans to cut 10% of
its staff this year in a move primarily aimed at shuttering
business units that aren't profitable and shouldn't impact any
customer-care units or competitiveness, the company's spokesman
said Monday.
"Our goal is primarily about reducing activities that are not
profitable and to not harm any customer experience across the whole
company," Hany Farghali said. There will be no cuts to positions in
customer care units, he added.
The company is majority-owned by Spain's Telefonica SA (TEF) and
has been suffering steady declines in revenue in the voice and
fixed-line segments in recent years as smart phones and other
web-based applications pare customers away from the one-time
incumbent operator.
Ctirad Volek, head of personnel at the company, said the cuts
are to center on units that are unlikely to become profitable.
"It's not a secret that our telecommunications market is
changing and we must react, and this is part of that reaction," Mr.
Volek said.
"For a long time we've been looking for synergies and reshaping
processes, and we're stopping non-profitable activities," he
added.
However the company is still profitable and is buying back some
of its stock from the market, it also has a dividend policy that
pays out both a part of net profits and a part of accumulated
profits from previous years.
The company has roughly 5,900 employees in the Czech Republic
and this year will cut about 500 jobs as part of the ongoing
restructuring plan adopted in 2010, Mr. Farghali said.
While a staff reduction was expected, the scope of the cut is
surprising, said Josef Nemy, analyst at Komercni Banka. "We
expected only half the amount of job cuts," he said, adding that
the sharp headcount reduction will improve profitability but added
it could make it uncompetitive in the long-term.
Telefonica's Mr. Farghali refuted such assertions, saying the
move will benefit the company's competitiveness by allowing it to
shed loss-making units and focus on areas that support the bottom
line.
The cuts and their impact on the company's net earnings and
dividend policy haven't yet been announced but should be publicized
once the supervisory board has voted on the measures, which could
be in about a month, said Mr. Farghali.
At 1335 GMT the company's stock was trading at 329 koruna
($17.1), down 0.3% on the day, a smaller decline than the overall
lower market in Prague, which is down 1.4% on the day.
Write to Sean Carney at sean.carney@dowjones.com
Go to http://blogs.wsj.com/emergingeurope/ for the new Dow Jones
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