Mobile phone licences cost Sonera staff dear...
Sinking Finnish telco Sonera has announced 1,000 job cuts in an effort to recover major financial losses incurred after its purchase of 3G mobile licences.
The cuts come from its core of 11,000 staff. According to a source at Nomura Group losses will be taken in corporate administration, wireless ventures and its telecoms business. Sonera's information communications and mobile portal, Zed, will remain untouched.
Cyrus Mewawalla, analyst at Nomura, said: "Sonera is making a pre-emptive response to the deferment of its 3G revenues by cutting costs."
Mewawalla said he expects the telco to begin hiring once the market picks up, although he does not know when that may be. "At the moment telcos are plummeting like stones. Everyone's forecasts are coming down on 3G revenues by the day."
The cuts began as the organisation came under increasing pressure from debt rating agencies to make up for it's high investment in the slack 3G market. Credit rating agency Moody's downgraded Sonera's short term debt rating today.
The company has net debts of around E5bn (£3.15bn), mostly gained through its E4bn (£2.5bn) spend on 3G mobile licences last year. Sonera returned its Norwegian licences last week, recording a small E18bn (£11.3bn) loss to aid recovery and giving the company time to concentrate on other investments held in Germany, Italy and Spain.
Sonera plans to reduce its debts to E2.5bn (£1.6bn) by the end of 2001. Earlier this week the telco announced its intention to recover more cash by selling its Deutsche Telekom shares.