Eircom to shed 2,000 jobs in effort to cut €100m per year
IRELAND’S BIGGEST telecoms company, Eircom, plans to shed 2,000 jobs over the next 18 months in an effort to save €100 million a year.
This is twice the level of redundancies previously indicated by the company, and represents 35 per cent of its 5,700-strong workforce. The company will initially ask staff to opt for voluntary redundancy.
It represents further bad news for the Government on the employment front and comes just a day after it was reported that State-owned An Post is seeking to cut up to 1,500 full-time positions by 2016.
Minister for Communications Pat Rabbitte said it was “regrettable that further restructuring seems inevitable” at Eircom. “But the commitment to invest €1.5 billion to upgrade the network is welcome.”
Eircom has been in an almost permanent state of restructuring in recent years as it has sought to modernise and address legacy costs from its days as a State-owned entity.
It has also struggled under the burden of massive debts put on the business by a succession of private-sector owners.
Eircom’s workforce has been reduced by 1,500 over the past three years. The company only emerged from an examinership process earlier this year after its lenders agreed to cut their gross debts from €4 billion to €2.35 billion while taking control of the group.
Eircom has had seven different owners since 1999, when it had about 13,000 staff.
Its revenues declined by 10 per cent to €1.515 billion in the year to the end of June 2012 as the company continued to lose market share in the fixed-line telephone and broadband markets.
In a bid to address its competitiveness issues, Eircom said it had decided to “accelerate a range of cost-saving measures” to bring its costs into line with its peers across Europe.
Staff were told yesterday that a programme of cuts needed to be introduced by the company.
Other changes will include further modernisation of work practices and the closure of certain office locations around the Republic that are no longer deemed viable.
Eircom said “detailed discussions” with staff and their trade union representatives would begin shortly. This will include “face-to-face sessions throughout the State over the coming weeks” and will be led by Eircom’s new chief executive, Herb Hribar.
He said the challenges facing Eircom were “significant” and required “a fundamental transformation” of the business. “The programme is ambitious but the challenges are not insurmountable,” Mr Hribar said.
Eircom said the restructuring was part of a five-year business plan drawn up during the examinership process. This involves capital expenditure of €1.5 billion over the period, including €400 million on building a fibre network to support high-speed internet services for a million premises.
“The business strategy remains sound and our strategic investment continues,” Mr Hribar said.
Steve Fitzpatrick, general secretary of the Communications Workers Union, which represents the majority of staff at Eircom, told The Irish Times: “It’s not pleasant but then it hasn’t been for the past five years. I will be looking to see that the pain is evenly spread across the company.”
Mr Fitzpatrick noted that a high number of “contractors and consultants” work for Eircom. “These will have to cease working for the company before affecting our staff,” he said.
The union yesterday stated that its members had already agreed a “very difficult” rescue plan at the time of the examinership.
Despite its difficulties, Eircom retains a strong position in the marketplace. It has a 67 per cent share of the broadband market and has over 60 per cent of fixed-line voice business.
Its share of the mobile market – where it operates the Meteor and eMobile brands – is just under 20 per cent.