June 12, 2007 / 1:27 PM / 13 years ago

O2 Germany plans to speed up job cuts

By Nicola Leske

DUESSELDORF, Germany, June 12 (Reuters) - Telefonica’s (TEF.MC) O2 Germany will start to cut a couple of hundred jobs earlier than previously announced as part of a cost-cutting scheme, the head of the unit said.

“We will have to do it this year and begin by the summer,” Rudolf Groeger told Reuters in an interview on the sidelines of an industry conference on Tuesday.

Groeger previously said job cuts had been completed for this year and that no more were planned until 2008.

The Munich-based company plans to save 80 million euros

($106.8 million) this year by reducing staff and improving efficiency.

It is aiming to cut costs by 100 million euros in the coming year, Groeger said, adding that the plan would be implemented after meeting with the works council and top executives this month.

The cuts will affect infrastructure and marketing staff, he said.

Groeger declined to say how many employees would have to leave but said a figure of 1,000 in media reports was “way too much”.

O2 Germany has more than 4,800 employees and some 11 million customers. By comparison, rival KPN’s German unit E-Plus has 13 million customers and a staff of around 2,800.

After years of growth, O2 Germany reported a 3 percent decline in sales to 843 million euros in the first quarter and a 5 percent drop in operating profit to 161 million euros.

It has been trying to tap into the growing DSL broadband market in Germany as mobile connection prices continue to drop, but it has been struggling with technical delays in its combined mobile and broadband offers, which it introduced October 2006.

Its parent company, Telefonica, has its own fixed-line network in Germany as does Vodafone’s (VOD.L) German unit, Arcor, but both companies have to lease the last mile into people’s homes from former monopoly Deutsche Telekom (DTEGn.DE).

This year O2 Germany aims to win 130,000 to 150,000 new DSL subscribers, Groeger said. By the end of March it had 31,000, a figure it had planned to arrive at by December 2006.

Groeger, who joined the company in October 2001 as chief executive, dismissed a media report that his position was at stake due to O2 Germany’s poor quarterly performance and said he and Telefonica’s management were on the same page.

He added that the company was well positioned for the coming quarters and he was confident the trend was moving upwards.

((Reuters messaging: nicola.leske.reuters.com@reuters.net; +49 69 7565 1214; editing by Jane Baird))

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