Telefonica to Cut 18% of German Jobs After E-Plus Deal

Telefonica SA plans to eliminate 18 percent of its workforce in Germany following the completion of its $11 billion takeover of wireless carrier E-Plus this month.

A total of 1,600 out of 9,100 full-time positions will be cut by 2018, Munich-based Telefonica Deutschland Holding AG said in a statement today. The company will continue negotiations with the works councils.

Thorsten Dirks, the former head of E-Plus who became chief executive officer of the merged company, is seeking to halt a slide in earnings and reduce expenses to justify the price of the acquisition. The companies have targeted as much as 5.5 billion euros ($7 billion) in additional revenue and cost savings from the merger.

The job cuts will affect sales positions, call-center workers and administrative functions, and some departing employees may move to partners such as Drillisch AG, according to a person familiar with the matter, who asked not to be identified discussing internal deliberations. Phone companies need fewer store staff as customers increasingly obtain handsets and contracts through websites.

Telefonica Deutschland, which sells services under the O2 brand, rose 0.1 percent to 3.58 euros at 1:13 p.m. in Frankfurt. Telefonica added 0.3 percent to 11 euros in Madrid.

Telefonica Deutschland executives have also outlined plans to reduce the combined companies’ tax bill, the person said.

Telefonica’s takeover of E-Plus from Royal KPN NV created Germany’s largest wireless carrier by customers, with almost 47 million connections, ahead of Deutsche Telekom AG and Vodafone Group Plc. It also removed E-Plus as a competitive force that led on price cuts and innovations over the last decade.

As a condition for European approval, Drillisch, a smaller carrier that doesn’t own a network, agreed to buy as much as 20 percent of the merged company’s network capacity over five years.

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