Alcatel to axe 10,000 jobs worldwide

PUBLISHED : Wednesday, 09 October, 2013, 12:00am
UPDATED : Wednesday, 09 October, 2013, 4:47am

Telecommunications equipment maker Alcatel-Lucent announced plans yesterday to cut 10,000 jobs worldwide in what its chief executive called the last chance to turn the company around from heavy losses.

The product of a 2006 Franco-US merger aimed at creating a global giant, Alcatel-Lucent told a European Works Council meeting it intended to axe nearly a seventh of its employees. Altogether, 4,100 posts will go in Europe, the Middle East and Africa, 3,800 in the Asia-Pacific region, and 2,100 in the Americas.

It is the latest step in a plan announced in June to focus on high-growth areas ranging from 4G mobile to high-speed broadband, and to lower fixed costs by more than 15 per cent, saving €1 billion (HK$10.5 billion).

"The 'Shift Plan' is about the company regaining control of its destiny," chief executive Michel Combes, the latest of three heads since the merger, said.

He told Le Monde newspaper: "Everyone knows this plan is the last chance. The company is in a very serious situation."

Including past measures, the total cost of the plan is €1.2 billion, an amount the company expects to fund through asset sales.

Alcatel shares rose in early trading yesterday. The stock has almost tripled in value this year on buyers' hopes that Combes, a former chief executive of Vodafone Europe, can shore up the business.

"The group is eating up a lot of cash and is unable to enhance its profitability, so some kind of change was needed to make sure it has a long-term future," one financial analyst in Paris said.

The group, which employs 72,000 staff worldwide and competes with larger rivals Ericsson of Sweden, China's Huawei and Finland's Nokia, has posted five straight quarters of net losses.

The French Democratic Confederation of Labour said it would fight a plan that entailed cuts to about 15,000 posts, although 5,000 new jobs would be created, giving the overall loss of 10,000. Nine hundred jobs would go in France, with the closure or disposal of five sites.