360networks to slash 800 jobs

"This was an extremely difficult decision, but necessary in light of the very challenging telecom environment and our need to operate as cost-efficiently as possible," said CEO Greg Maffei of 360networks.

The news follows the Vancouver, Canada-based company's announcement on June 15 that it would not make a scheduled US$10.9 million interest payment to bondholders on US$2.5 billion of debt.

Company spokeswoman Michelle Gagné said that half the cuts will come from operations in the United States, while 130 full-time and 100 contract workers will be let go in Canada. The remaining layoffs will come from businesses in Europe, South America and Asia, leaving about 1,000 employees who will continue with the company.

The company raised and spent billions in the past few years to build a worldwide telecom network and now faces a credit crunch due to the downturn in the stock market.

The company announced a first-quarter net loss of US$106 million compared with US$45 million for the year-ago quarter. The company also said it would reduce capital spending by between US$1 billion and US$2.4 billion.

Gagné expects 360networks to announce results for the second quarter ending June 30 sometime in early August.

Last June, 360networks agreed to pay SingTel US$800 million for a quarter of the capacity of its C2C submarine cable which links Hong Kong, the Philippines, Taiwan and Singapore.