Sunday 21 October 2018

Eir restructure tipped to follow Swiss model

French billionaire Niel set to use same template for Irish job cuts

French telecoms tycoon Xavier Niel Photo: Christophe Morin/Bloomberg
French telecoms tycoon Xavier Niel Photo: Christophe Morin/Bloomberg

Fearghal O'Connor

Eir's new French billionaire owner could model his restructuring of the telecoms company on a radical plan already undertaken by his company in Switzerland, it is understood.

Two firms controlled by telecoms tycoon Xavier Niel, Iliad and NJJ, finalised their €650m purchase of a majority share in Eir last week and immediately announced a huge voluntary redundancy plan that will see 750 jobs lost at the former semi-state company.

The cutback plan, which will see close to a quarter of Eir's staff leave the company, is part of a major restructuring envisaged for a number of months by the new French owners since they first moved to acquire the former State company in December and was first reported by the Sunday Independent in early March.

In February 2015, Niel, who had previously been credited with a major shake-up of the French telecoms market with his company Free, led a similar swoop by his investment firm NJJ on Orange Switzerland.

It was one of the main players in that market but had been flagging at the time in the face of competition. Its restructuring programme is likely to provide hints as to what can be expected at Eir, according to sources.

Many staff - apart from a cohort of key front-line engineers - have been offered a redundancy payout that is believed to total more than €100m and which could see individual workers receive figures averaging well over €100,000.

They have been given 30 days to decide whether or not to accept the deal and sources said the exact shape of the restructuring will be largely decided by which staff opt to go.

Trade unions are reported to have prepared ballots for industrial action should the required number of staff not opt to take the deal to leave the company and should the new owners move to a more confrontational approach of seeking compulsory redundancies

But other industrial relations sources, with extensive knowledge of similar redundancy payouts, said that it was likely that Eir's new owners would get the required number of staff to leave, particularly if they were prepared to increase the offer should the first round of offers fail to hit its target.

Since news of the cutbacks broke, there has been much speculation within the company that the new restructuring plans involve centralising a number of shared services to France - a move which sources said would ultimately challenge the voluntary nature of the process.

Eir declined to comment on any aspect of the restructuring but it is understood that management sees the plan as entirely voluntary, without any plan to move Irish-based business functions to the Continent.

Nevertheless, the blueprint for the takeover of Orange Switzerland - subsequently rebranded as Salt - is reported to have involved a complete transformation of how that company operated from the ground up.

A huge number of staff departed the Salt business during the restructuring, which was masterminded by Niel and his Paris-based team. Within a year of the takeover, quarterly earnings at Salt had grown by more than 8pc driven by a massive 30pc fall in labour expenses, as well as a fall in other expenses of as much as 25pc.

Salt has shaken up the Swiss market and recently announced its entry into the country's fixed broadband market, launching an aggressively-priced triple-play bundle, which undercut its competitors by a substantial margin. But its overall results have also disappointed to date, with big falls in both its subscriber base and its average revenue per user.

Staff at Eir are understood to be concerned that similarly radical cutbacks at the company could negatively impact its customer service in a competitive market, although Eir's new owners moved to reassure staff and customers that it could fulfil all of its commitments when it confirmed the cutbacks last Thursday.

Sunday Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business