By Sam Schechner 
 

PARIS--French telecom company Bouygues Telecom hopes to cut 5.7% of its workforce, as it restructures to cut costs amid a price war in the domestic cell phone market.

The company, a unit of industrial conglomerate Bouygues SA (EN.FR), told unions Tuesday that it expects its restructuring to involve voluntary departures covering 556 jobs, the company said. Following negotiations with unions, it said it hopes to begin implementing the plan before the end of the year. The unit has 9,800 employees.

Bouygues' job cuts come as the French telecom sector remains locked in a brutal price war. In January, upstart Internet- and phone-service provider Iliad SA (ILD.FR) launched new cut-rate mobile-phone offers that surprised its competitors. The new operator, dubbed Free Mobile, racked up 2.6 million subscribers in the first three months of the year, forcing France Telecom SA (FTE), Vivendi SA's (VIV.FR) SFR and Bouygues to cut prices and contemplate restructuring.

Indeed, SFR told unions Tuesday that it would present them with its own voluntary departure plan as early as November. The company also told unions that it would cut roughly 1 billion euros ($1.26 billion) in costs over the course of 2012 and 2013, to align its costs and restore its competitiveness.

-Write to Sam Schechner, sam.schechner@wsj.com