Telia to slash 3,000 jobs in Sweden

In announcing disappointing second quarter results, Sweden's telecoms operator Telia Sonera has detailed massive cost savings that will lead to significant job losses in Sweden.

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The company made a profit of 3 billion kronor after tax and capital costs, down from 5.5 billion in the same period last year.

Despite an increase of 6% in net sales to 21,752 million kronor and what the company described as "strong customer growth", managing director Anders Igel descibed the full impact on Sweden of the ongoing cost-cutting programme.

"In total it will be about 3,000 staff who will be let go," said Igel to news agency TT.

The company is determined to save up to 6 billion kronor a year - and between 4 billion and 5 billion of that will come from Sweden.

The need for cost savings is motivated by increasing price pressure from other operators, not least Tele2 and its flat rate offer which is said to have won it 38,000 new customers in the last quarter.

1,000 Telia Sonera staff have already been offered early retirement and 625 have accepted.

But the chairman of the Union of Service and Communication Employees, Janne Rudén, told TT that it was still unclear when the rest would get their marching orders.

"But we should point out that when the company made people redundant before, they were people who were needed in operational areas," he told TT.

"This has meant that either their colleagues have to work twice as hard or operations are outsourced."

Operating income, excluding exceptional items, was down 13.3 percent at 4.38 billion kronor. Market expectations had been for an operating profit of 4.663 billion kronor.

Sales rose to 21.752 billion kronor from 20.422 billion, while EBITDA, or earnings before interest, taxation, depreciation and amortization and excluding non-recurring items, fell to 7.2 billion kronor from 7.327 billion.

TeliaSonera said that while there had been good development in most operations, price pressure and migration from fixed to mobile and Internet in Sweden and Finland pressured margins.

"The strong volume growth in mobile communications is expected to continue but price pressure will limit sales growth in the home markets," the company said.

"In Sweden, decline in sales of traditional fixed services will partly be compensated by sales of other services during the three-year transition (restructuring) period. After this period, market growth is expected to return to higher levels," it added.

The Local/AFP