Bloomberg News

Magyar Telekom Plans to Cut 15 Percent of Its Jobs

October 01, 2007

Magyar Telekom Nyrt., the former Hungarian phone monopoly now controlled by Deutsche Telekom AG (DTE), said it will cut 15 percent of its jobs next year to reduce personnel expenses.

Magyar Telekom agreed with trade unions to spend 24 billion forint ($136 million) on severance payments, the Budapest-based company said in an e-mailed statement. It also agreed to raise employee wages 5.5 percent from March 2008. The overall impact will be a 5 percent cut in personnel costs.

Chief Executive Officer Christopher Mattheisen, who took over last December, has to contend with lower revenue from the fixed-line business as customers switch to mobile phones, and eroding profitability on wireless because of competition from operators such as Vodafone Group Plc.

``With the aim for further efficiency improvement and headcount reduction, management started negotiations with the trade unions and reached agreement today,'' the company said in its statement.

Deutsche Telekom, which owns 60 percent of the Hungarian company, is engaged in a three-year program announced in 2005, involving the elimination of 32,000 jobs. It is expanding in southeast Europe through Magyar Telekom, having bought phone companies in Montenegro and Macedonia. Magyar Telekom also submitted a bid for the Slovenian incumbent today.

The severance payments will be booked in the fourth quarter, and most of the job cuts will be implemented on the last workday of this year, Magyar Telekom said.

To contact the reporter on this story: Balazs Penz in Budapest at bpenz@bloomberg.net.

To contact the editor responsible for this story: Chris Kirkham at ckirkham@bloomberg.net.


Reviving Keynes
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus