July 17, 2012 / 5:26 PM / 7 years ago

France plans action on telcos in September

PARIS, July 17 (Reuters) - France will present measures in September aimed at preventing layoffs in a telecom sector thrown into tumult by the arrival of low-cost mobile player Iliad .

Fleur Pellerin, the junior minister for the digital economy, said on Tuesday the government would not accept that companies like Bouygues Telecom and Vivendi’s SFR use job cuts as a way to cope with the price war now underway in the French mobile market.

“We do not accept that jobs become the adjustment variable, especially in the telecom sector, which is regulated and inherently insulated from international competition,” said Pellerin during a question-and-answer session before the National Assembly.

The announcement shows how the government is seeking to reassert its influence on France’s telecoms sector in a period of brutal competition and looming layoffs.

The bosses of France Telecom, SFR, Bouygues, and Iliad met with Industry Minister Arnaud Montebourg and Fleur Pellerin on Tuesday morning to discuss the sector.

Few concrete measures were discussed, but executives called the meeting “productive” and said further talks would take place later in July.

Iliad launched its ‘Free Mobile’ service in January at cut-rate prices and put huge pressure on existing operators France Telecom, SFR and Bouygues Telecom.

It signed up 2.6 million customers through mid-May with a pared down line of 14 mobile phones and no fixed contract lengths. It offers only two monthly plans — one at 2 euros and another at 19.99 euros — compared with hundreds sold by rivals.

To cope, SFR is planning to cut costs by 450 million euros this year, while Bouygues aims to reduce costs by 300 million. Bouygues says that it wants to cut 556 jobs through voluntary departure schemes.

Vivendi is negotiating a similar plan with its unions but has not said how many jobs will be affected.

France Telecom, in which the state is the top shareholder with 27 percent of the capital, is not planning staff cuts.

WEIGHING MEASURES

According to sector sources, the government is weighing whether to revisit parts of a 2008 law that made consumer-friendly changes to the telecom market, such as outlawing charging people for the time spent on hold on customer service hotlines.

One idea under consideration would be to allow operators to charge again for such hotlines, but only if their call centres were located in France.

Telecom operators have off-shored thousands of call centre jobs to French-speaking countries like Morocco and Tunisia in the past decade to take advantage of the lower costs.

France Telecom Chief Financial Officer Gervais Pellissier told Reuters in June that the group would consider bringing call centres back to France but that it was often difficult to staff them 24 hours a day, 7 days a week with French workers.

“The issue is how can we provide the same service,” he said, adding that France Telecom’s overseas call centres tended to be used for such non-office hours.

The Socialist government is also mulling changing a part of the 2008 law that allowed consumers to get out of their two-year mobile contracts after one year if they pay out a portion of the remaining fees.

The measure made it easier for consumers to cut short contracts and defect to other operators for lower prices. Some industry executives argue it is no longer needed given how Free Mobile and other companies now offer services with no long-term contracts.

It remains to be seen whether any of these ideas would be effective at preventing layoffs at SFR or Bouygues, analysts say. The government cannot simply ban layoffs, since both companies are private. (Reporting by Leila Abboud and Jean Baptiste Vey; Editing by Jon Loades-Carter)

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