French phone companies may eliminate as many as 10,000 jobs to reduce spending as they adapt to increased competition from Iliad SA (ILD)’s new mobile service, telecommunications regulator Arcep said.
“If carriers’ sales and margins continue to decrease, they will have to cut spending,” Arcep President Jean-Ludovic Silicani told journalists at a meeting in Paris today. “There could be between 5,000 and 10,000 jobs cut” out of an industry workforce of 130,000 in France.
Iliad started offering mobile service at discounted prices in January under the Free brand, competing with France Telecom SA (FTE)’s Orange service, Bouygues Telecom and Vivendi SA (VIV)’s SFR. While France’s fourth mobile operator has declined to say how many subscribers the service has attracted, Silicani has estimated Free may have gained as many as 2 million customers in the first two months.
The job cuts don’t “necessarily mean they’ll fire these people,” Silicani said, adding that posts may be shed by such measures as not replacing employees who retire for two years.
Vivendi, which began a review of its SFR wireless division last month, may eliminate hundreds of marketing and administrative positions to offset a projected slump in earnings of as much as 570 million euros ($757 million) at the unit, top union officials said two weeks ago.
Bouygues Telecom, a Bouygues SA (EN) subsidiary and France’s third phone company by sales, said last month that cost savings will partly make up for a negative effect of 250 million euros on its 2012 earnings due to a drop in revenue. The company plans to save about 300 million euros as of 2013.
France Telecom is the biggest employer in the industry, with about 100,000 workers. The former French state-owned phone monopoly has vowed to maintain its workforce in the country at about level by 2015 as part of the four-year development plan it detailed in May 2011.
Vivendi rose as much as 1.3 percent and was up 0.9 percent at 14.03 euros as of 4:44 p.m. in Paris. Bouygues declined 0.1 percent to 23.26 euros and France Telecom stock fell 0.3 percent to 11.48 euros.
To contact the reporter on this story: Marie Mawad in Paris at email@example.com