Telenor cuts costs, slashing 450 jobs

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Telecommunications giant Telenor will cut 450 full time equivalent (FTE) positions as part of a major downsizing of its Norwegian operations. It means about one in 10 jobs will be lost, and all 4,000 employees were encouraged to apply for severance packages on Wednesday.

Telenor opened 77 new shops throughout Norway in early 2014 to meet rising demand in the smart phone industry, and plans to meet last year's NOK 4.4 billion investment in mobile and broadband technology. Yet the company said costs are rising while turnover and profitability are falling. The company's 4,000 employees were offered severance packages on Wednesday, and Telenor plans to cut 450 full time equivalents, or one in 10 jobs. PHOTO: Telenor

Telenor opened 77 new shops throughout Norway in early 2014 to meet rising demand in the smart phone industry, and plans to meet last year’s NOK 4.4 billion investment in mobile and broadband technology. Yet the company said costs are rising while turnover and profitability are falling. The company’s 4,000 employees were offered severance packages on Wednesday, and Telenor plans to cut 450 full time equivalents, or one in 10 jobs. PHOTO: Telenor

Telenor Norway’s Chief Executive Berit Svendsen said the redundancies are part of efforts to slash costs. “Last year we reduced costs by half a billion kroner (USD 83.4 million),” she told newspaper DagensNæringsliv (DN). “This year the goal is a few hundred million more.”

Telenor reduced staffing by 225 positions last year, and Svendsen said the goal is to at least double those cuts in 2014. “We must be 450 fewer this year, including consultants,” she explained, adding that Telenor uses several hundred consultants. “We would rather develop important skills among our own staff, rather than purchasing this expertise through consultants.” She said not everyone who applies for a redundancy will be granted one, so the company can keep critical skills in-house.

More spending, lower profits
The cuts follow large investments by Telenor Norway in mobile and broadband technology, and a steadily falling customer base in the formerly lucrative fixed-line phone market.

“Last year we invested 4.4 billion kroner in Norway,” Svendsen told DN. “That makes us the player who invests the most in the trading sector in mainland Norway. While profitability fell, the costs went up and we had a falling turnover. For example, we lose 100,000 fixed line customers a year.” She said the company plans to invest the same amount in new technology this year.

The cuts come despite Telenor Norway being the group’s major cash cow. Last year it had an operating margin before depreciation of more than 42 percent of a revenue just over NOK 25 billion. “I compete with 12 other Telenor companies in countries like Thailand and Malaysia over investment funds,” said Svendsen. “We in Norway will invest to increase revenues, but the challenge is that we must demonstrate a competitive return.”

Unions satisfied
The severance packages are scaled according to the time a worker has worked for Telenor. An employee of five years will offered nine months worth of salary, while an employee of between 24 and 48 years will be offered 21 months’ pay.

“If anyone had thought about quitting, this is a golden opportunity,” said Per Gunnar Salamonsen from the energy, electrical engineering, telecommunications and IT workers union (EL og IT-forbundet), which has 1,300 members in Telenor. “If management says no to those who apply for a severance package, Telenor has extended the employer’s responsibility to take care of them in the future.”

Telenor workers have three weeks to make a decision. Svendsen said it’s the first time Telenor has offered such packages in Norway, but Telenor did the same in Sweden a few years ago. Telenor’s Norwegian subsidies Talkmore and Datametrix are not affected.

newsinenglish.no/Emily Woodgate