TEL AVIV (Reuters) - Bezeq Israel Telecom said on Monday its expected 2018 annual profit would fall by almost half after approving a cost cutting plan to retire 337 workers early at an expense of 512 million shekels ($136 million).
The expense would be in addition to 90 million shekels set aside in the first and second quarters of 2018 for early retirement, Israel’s largest telecoms group said in a statement.
In total these expenses are expected to reduce 2018 net profit by 464 million shekels, Bezeq said. The company had reiterated a 1.0 billion shekel forecast last month.
The job reductions at Bezeq’s fixed line division amount to 3 percent of the company’s workforce and could pave the way for additional cuts, Barclays analyst Tavy Rosner said.
“We estimate that there is significant room to decrease the workforce at Bezeq’s three other divisions,” said Rosner, who estimated the company can cut 19 percent of its workforce.
“Today’s early retirement falls within the existing agreements with the trade unions and we believe that the company will be able to negotiate additional cuts with the unions.”
Bezeq shares were down 0.8 percent in morning trade compared with a 0.2 percent gain in the Tel Aviv 35 blue chip index.
Bezeq has undergone a shake-up of its management and board the past year in the wake of a securities investigation into the company and former officials who have since resigned.
In August, Bezeq said it planned to merge its mobile phone, satellite TV and Internet service provider units into one company, pending regulatory approval, as part of efforts to cut costs.
Reporting by Tova Cohen; Editing by Steven Scheer and Kirsten Donovan