FRANKFURT -(Dow Jones)- T-Mobile International AG (TMO.YY), the mobile phone unit of Deutsche Telekom AG (DT), Thursday said it plans to cut up to 2,200 jobs at its European operations by the end of 2006.
Of these job cuts, around 1,200 are likely to be in Germany, T-Mobile said.
The job cuts are part of the cost savings plan, dubbed "Save for Growth," that targets EUR1 billion of savings by the end of 2006, and was first announced in autumn 2004.
T-Mobile's European cost-cutting efforts come as its European operations struggle to maintain margins amid fierce competition in its home market. Royal KPN NV's (KPN) E-Plus won more customers in Germany than T-Mobile in the third quarter.
Still, T-Mobile was Deutsche Telekom's key earnings growth driver in the third quarter of 2004, because of accelerating growth at its U.S. unit T-Mobile USA, formerly VoiceStream, that added 0.9 million customers in the quarter.
T-Mobile posted a 24% jump in operating profit to EUR2.2 billion in the third quarter.
T-Mobile employs around 21,000 people in Europe in Germany, the U.K., Czech Republic, Austria and the Netherlands. The proposed cuts mean the company is shrinking its European workforce by around 10%, and will save around EUR150 million.
However, most of the planned EUR1 billion cost cuts will be achieved by reducing the subsidies it gives to customers and by shrinking the range of handsets to between 30 to 40 from the current 60.
This could potentially hurt mobile handset makers such as market leader Nokia Corp. (NOK), Motorola Inc. (MOT), Samsung Electronics Co. Ltd. (005930.SE) and Siemens AG (SI), which all supply handsets to T-Mobile."
Posted to the site on 20th January 2005
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