Report: SFR, Bouygues plan job cuts amid tough low-end competition

Vivendi's SFR and Bouygues Telecom reportedly plan to cut jobs and operating expenses as they struggle to realign their operations to fight off cut-price competition.

SFR has informed union representations that the main points of its restructuring plan involve voluntary redundancies, together with a €500 million cut to 2013 operating expenses in addition to the €450 million already targeted for 2012, an unnamed union source told Reuters.

Deutsche Bank analyst Patrick Kirby said the €950 million savings were at the high end of expectations and "a large number to come out of a cost base which has already been quite tightly managed."

An SFR spokesman told Reuters that the details of the full plan, aimed at restoring the operator's competitiveness, will be presented in November, but declined to reveal 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, referring to a presenation to the Works Council. "The idea of this presentation is to explain that we need to transform to restore SFR's competitiveness in the market."

However, a union source said that SFR's plan to widen the gap between its low-cost and value-added offers will result in a smaller number of products, according to Les Echos. This announcement on redundancies comes as SFR and its parent Vivendi undergo management upheaval following the resignation last week of CEO Jean-Bernard Lévy.

Meanwhile, Bouygues Telecom has confirmed that it will cut 556 jobs through voluntary departures as a necessary response to competition from low-cost rivals. According to Les Echos, it also revealed that its profitability could decline this year despite having launched a cost-reduction plan intended to save €300 million, as sales plummet by 15 to 20 per cent in 2012.

For more:
- see this Reuters article
- see this Les Echos article (translated via Google Translate)
- see this separate Reuters article

Related Articles:
Analyst: Free Mobile driving structural change within France
Analyst: Free Mobile will struggle after launch success
SFR plans to fight subscriber declines with low-cost offers
Report: SFR faces cost cuts of €450M 
Vivendi takes knife to SFR projects, plans new strategy