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France Telecom to axe 22,000 jobs

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France Telecom is axing 22,000 jobs - between eight and ten per cent of its workforce - in a bid to cut costs as it is hit by a decline in traditional telephone services.

Most of the job cuts are to be made in France, although around 1,000 look set for the chop outside the telco's home territory. Whether that includes the UK, where Orange and Wanadoo operate, has yet to be disclosed.

No one from France Telecom was available for comment at the time of writing although some press reports have suggested that the UK could be spared.

Although 22,000 jobs are to be lost, the firm also intends to hire some more workers between now and 2008, taking the net reduction in headcount down to 17,000.

The giant telco blamed a decline in revenues on home soil - due in part to lower cost of phone calls and lower call volumes - for the cull. This decline "intensified" over the last three months of 2005 as France Telecom came under increasing pressure from a growth in VoIP services, it said today.

Publishing its results, France Telecom reported that revenues grew by 2.5 per cent year-on-year to €49bn and that EBITDA (earnings before interest etc) was up a smidgen at €18.4bn from €17.9bn. Snag is, the telco is lumbered with a whopping net debt mountain of €47.8bn.

Analysts at Ovum say it is becoming "increasingly difficult for the group to generate revenue growth, and profitability is suffering as a result of increased expenditure in a highly-competitive environment".

"It is in this context that the announcement to cut a further 8 to 10 per cent of its workforce by 2008 needs to be seen," Ovum said. ®

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