Eircom chief warns of 'difficult choices' ahead
Eircom boss Paul Donovan has warned employees of "difficult choices" in coming months and said that the telco needs to move "even faster and deeper" to cut its costs amid mounting competitive pressure and its "extraordinarily high debt burden".
The company, which also owns Meteor, has recently opened a voluntary leaving scheme to its 6,800-strong workforce which could cost up to a further €60m. Staff have until May 21 to apply for what Mr Donovan has described as "extremely generous" redundancy packages given the economic climate.
In an internal letter to staff seen by the Irish Independent, Mr Donovan said that "well-funded" global companies including Vodafone and UPC have been targeting Eircom's customers and revenues "very aggressively".
"Combine this adverse revenue outlook with our extraordinarily high debt burden and cost base and you can see that we have no alternative but to continue to take action to address our cost base and to improve our business efficiency," he told employees.
Eircom has a debt pile of about €4bn.
The company, which was formally acquired at the start of this year by Singapore's ST Telemedia, originally introduced a voluntary redundancy scheme last year that aimed to axe 1,200 of its workforce by March 2011. To date, 800 staff have left under the scheme.
Speaking to the Irish Independent, Mr Donovan confirmed that the group was attempting to "accelerate" the process prior to Eircom's financial year-end in June. He added that the average payout per employee leaving under the scheme is €150,000 but said such terms wouldn't be available in a future voluntary scheme.
"In the future we won't be able to have schemes as generous as these," he said, adding that there was no target for job losses beyond the 1,200 and that compulsory redundancies were not being contemplated.
He added in his letter: "To put it simply, we cannot continue to afford to pay these types of voluntary leaving terms and make the necessary investment in our future which must be our priority.
"As you already know, we are not in a position to make bonus payments this year," Mr Donovan said in the memo.