SFR, VIVENDI’S French telecoms business, plans to make €500 million of cost cuts next year on top of the €450 million targeted for this year as it grapples with low-cost competition, according to a union source.

SFR, which has lost 3 per cent of its customer base since the arrival of low-cost operator Free Mobile in January, yesterday presented to employee representatives the main points of a restructuring plan involving voluntary redundancies.

SFR’s plan comes as its parent company considers an overhaul of its own structure, including a possible breakup, after the departure of its chief executive last week due to diverging views on Vivendi’s future strategy.

An SFR spokesman said the details of the SFR plan, aimed at restoring its competitiveness, would be presented in November, but declined to disclose the number of redundancies and the extent of the cost cuts envisaged in the restructuring.

“Today we presented SFR’s main strategic directions for the future of SFR,” the spokesman said.

Like peers France Telecom and Bouygues Telecom, part of conglomerate Bouygues, SFR has seen sales and margins shrink as it tries to respond to the price war sparked by Iliad’s Free Mobile.

Bouygues is expected to announce a voluntary redundancy plan at its telecoms unit, threatening hundreds of jobs, according to French daily Les Echos.

Union sources also say that SFR plans to widen the gap between its low-cost and value-added offers which will result in a smaller number of products from September.

“There will be huge differences in terms of customer relations and service,” a source said.

Coinciding with the departure of Vivendi CEO Jean-Bernard Levy, Vivendi’s human resources chief Stephane Roussel was appointed to head SFR last week, instead of Michel Combes, whom Mr Levy had poached from Vodafone to lead a turnaround.

Mr Roussel, speaking on the sidelines of a press conference on Monday, said SFR continued to operate as usual despite the sudden management reshuffle.

“What happened in the last few days hasn’t had any impact on the business,” he said. – (Reuters)