­Telekom Austria has announced that it plans to cut 1,250 jobs and make a provision of €630 million (US$812 million) for the measure in its 4th quarter results. However, as the employees are protected by labour agreements from when the company was state owned, they cannot be made compulsorily redundant and the company hopes to offer incentives for them to take voluntary redundancy.

The job cuts are concentrated in the firm's fixed-line operations and are not expected to involve any employees within the mobile division.

"Against the backdrop of a shrinking domestic fixed line market, downsizing measures are imperative and consequently, we have initiated a comprehensive cost cutting program in the fourth quarter of 2007. While we have already achieved a number of milestones, a decision on the creation of a personnel agency for the redundant workforce has been postponed. Nevertheless, we will continue with our restructuring program until a decision has been made," says Boris Nemsic, CEO Telekom Austria Group.

The Telekom Austria Group also reiterates its full-year outlook 2008 for the operating business as announced with the 2008 half-year results. The restructuring plan will have an impact on reported results but not on the operating business.

The Telekom Austria Group continues to expect revenues to increase by approximately 5% in 2008 compared to the previous year. Excluding the planned non-cash provision for the restructuring program, EBITDA is expected to grow by about 3%, with growth from international operations overcompensating for a lower contribution from the Fixed Net segment. Operating income is expected to remain stable, excluding the impact of the restructuring program.

Net debt increased in 2007 mainly due to the acquisition of Velcom in Belarus. This will lead to higher interest expenses and a decline in net income by approximately 12% in 2008, excluding the impact of the planned provision for the restructuring program. Telekom Austria Group´s operating free cash flow continues to be expected to rise by about 10%. Including the non-cash provision for the restructuring program and its accounting treatment, the Telekom Austria Group expects reported EBITDA to fall by about 30% and reported operating income to decrease by about 85%.

Source:cellular-news