French operator SFR may announce 1,100 redundancies later this week owing to the difficult operating conditions in France, according to a story in Les Echos newspaper that cited comments made by a labor union official.
The French mobile-phone operator is set to present a jobs-reduction scheme to unions on Wednesday, but is also expected to create 300 new jobs, according to Vanessa Jereb of the UNSA union.
SFR’s problems stem from the market entry of Iliad (Paris, France) earlier this year. The company, which already had a reputation as a provider of low-cost broadband services, has been drastically undercutting its rivals on price.
Along with France Telecom (Paris, France) and Bouygues (Paris, France), SFR (Paris, France) has blamed the cut-throat competition for recent earnings setbacks.
Earlier this month, SFR reported a 6.9% decrease in revenues for the first nine months of the year, to €8.5 billion, compared with the same period in 2011, while earnings before interest, tax, depreciation and amortisation (EBITDA) slipped 7.9%, to €2.7 billion.
The operator has been re-pricing its services in response to the challenge from Iliad, but was also hit by reductions to mobile termination rates mandated by regulatory authorities.
The company hopes the launch of 4G services next year will present an opportunity to charge steeper rates to customers who value higher-speed connections.
It aims to switch on its LTE network in six French cities during the first half of 2013.
Nevertheless, the financial difficulties have increased speculation that parent company Vivendi (Paris, France) may be looking to sell SFR.
Although SFR is responsible for about 38% of Vivendi’s EBITDA, the conglomerate seems keen to reduce its exposure to the telecoms sector and focus more resources on core media interests.
Earlier this month, Egypt’s Naguib Sawiris reportedly expressed interest in buying SFR – although the telecoms tycoon has recently been linked with the takeover of other assets in the region.