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Vivendi in Cost Hunt at SFR Mobile Unit, Eyes Job Cuts

Vivendi in Cost Hunt at SFR Mobile-Phone Unit, Eyes Job Cuts
SFR is under pressure because of increasing competition in the French market. Photographer: Fabrice Dimier/Bloomberg

March 7 (Bloomberg) -- Vivendi SA, 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 ($749 million) at the unit, top union officials said.

SFR, the venture Vivendi bought out for 7.95 billion euros last year, has frozen new projects, hirings and research to adapt to falling prices in the French market after Iliad SA started a discounted service in January, union representative Damien Bornerand said in a phone interview. The unit of Paris-based Vivendi employs about 10,000 people.

“We’ve been told to expect more positions will be cut than initially planned. It could be 200, 500 or even more on top of the 120 cuts that were already decided,” Bornerand said. “It’s tough to say how big it will be.”

SFR is under pressure because of increasing competition in the French market. Iliad, due to report earnings on March 8, captured as many as 2 million mobile customers in fewer than two months, said French regulator Arcep. SFR said it lost 208,000 subscribers, while France Telecom SA said it had lost a similar number of clients as of mid-February.

Vivendi rose 2.2 percent to 13.85 euros in Paris trading today.

Changing Market

This year’s budgets, set at the end of 2011, are being called into question and all SFR managers have been asked to identify cost-cutting opportunities, Geoffroy de Vienne, another union representative, said in a separate interview. Spokesmen for both SFR and Vivendi declined to comment.

The impact on jobs is set to be discussed with unions in April. Job cuts could mean less interim and short-term contracts, shifting employees from one project to another, or lay-offs, according to both union representatives. The aim is to implement all cost-cutting measures by June, Bornerand said.

SFR will adapt its structure, capital expenditure and operational costs to new market conditions, Vivendi Chief Executive Officer Jean-Bernard Levy said last week.

Vivendi, which bought Vodafone Group Plc’s 44 percent stake in SFR last June, forecasts a profit slump through 2013. SFR’s earnings before interest, taxes, depreciation and amortization will drop 12 percent to 15 percent in 2012, from 3.8 billion euros last year, and the unit’s cash flow from operations will decline 15 percent to about 1.7 billion euros, Vivendi said last week.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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