Wednesday, November 2, 2005

Deutsche Telekom Faces Major Staff Reductions, 32,000 Cuts in 3 Years

Deutsche Telekom announced a major staff reduction program that will see employment levels fall by 32,000 workers in Germany over the next three years. This includes about 7,000 employees whose positions will be outsourced from DT subsidiary Vivento on a permanent basis. These employees will no longer work for Deutsche Telekom, but for other companies. One example of this are the Vivento Call Centers. While a further 25,000 employees are to leave the Group, around 6,000 new staff are to be employed. The new positions might include young technical staff and trainees for T-Punkt shops. This would put the net reduction of jobs over the next three years at 19,000.

A majority of the cuts are expected to occur at T-COM, where some 20,000 jobs will be cut as part of the company's "Simplicity" project. Other cuts will include 1,500 in the Group's centralized functions and 5,500 at T-Systems. However, 5,000 jobs will be created for the rollout of the company's fiber-optic network.

"The worldwide realignment of the industry, the rapid pace of technological development and, in particular, the tough competitive environment in the fixed network and broadband sector in Germany imposed by the regulatory situation, intensify the challenges facing the entire Deutsche Telekom Group," CEO Kai-Uwe Ricke emphasized. "On the one hand, we have to cut jobs in old core markets; on the other, there are opportunities to create jobs in new innovative markets."

Deutsche Telekom said the reductions initially would occur by voluntary measures. Talks with the German federal government are expected to begin once the country's new government is in place.

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