Sonera plans to save EUR 200 million, no massive job cuts

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The telecommunications service provider Sonera - the Finnish subsidiary of TeliaSonera - will not enact the massive job cuts that had been feared. Instead, the company plans to save about EUR 200 million in costs through other means.
      Juho Lipsanen, President of TeliaSonera Finland, says that the company is working together with the personnel. "The aim is to make Sonera a customer-oriented service company", he said.
      "I am really satisfied", said head shop steward Taru Maria Solakivi.
      A questionnaire had shown that Sonera staff gave their company fairly low ratings for overall atmosphere at work.
      "If you go and make violent changes here, it’s game over", Lipsanen said. Lipsanen took over at Sonera in mid-October. At that time he gave himself a 100-day deadline to come up with a plan to cut costs. Tuesday’s announcement came in about half that time.
     
Although job cuts are being avoided, the number of personnel in Sonera will clearly go down. Sonera plans to cut expenses by reducing the use of fixed-term employees and workers hired through temp agencies. The company also plans to offer ageing employees the possibility of early retirement.
      "There is room to manoeuvre with more than 1,000 people", estimates personnel director Juha Pentti.
      Sonera has 6,300 employees, about 500 of whom could take early retirement. About 600 have fixed-term contracts and 300 were taken on through temp agencies.
      Turnover in personnel this year is expected to be between 13 and 15 percent at Sonera. If the company hires five percent new staff, as Pentti said, the net reduction will be 500 jobs. When Sonera announced plans earlier this year to cut EUR 100 million in costs, it had a goal of reducing 650 employees.
     
The cost cuts are about ten percent of Sonera’s turnover of EUR two billion. The company’s management gave out fairly little information on how it plans to implement the massive cost cuts by 2008. Cutting back on personnel will not be enough, because personnel costs are just one fifth of all costs.
      Sonera and Lipsanen believe that increased use of IP technology will help reduce expenses. The company also believes that new investments will increase cost-effectiveness.
      The company’s information system contains parts dating back to the 1970s, and information between some parts of the system still has to be transferred manually.
     
"It is necessary to invest in order to save money, and it is necessary to save money in order to invest", Lipsanen said.
      Sonera plans to invest EUR 50 million in capital assets. Also a development programme will bring EUR 100-150 million in one-off costs.
      The time is good for investments, as others are not doing it. Lipsanen notes that situations change quickly in telecommunications, and when a change takes place, it happens very quickly.
      Sonera sees good opportunities for growth in broadband, where customers can be offered Internet telephone and television services. Another potential sector for growth is in combined telecommunications and IT services.
      Sonera is to set up its Information Society Structures and Services division, headed by Eero Sinkkonen, in Turku.
     
In the highly competitive mobile telephony business, Sonera is focusing on taking care of its existing clients. Already in the spring, Sonera began to reward its faithful mobile customers.


Previously in HS International Edition:
  Juho Lipsanen to lead Finnish operations of TeliaSonera (4.8.2005)
  TeliaSonera posts grim second quarter results - 3,000 jobs to go in Sweden (4.8.2005)
  TeliaSonera to dismiss no more than 330 people in Finland (12.4.2005)

Links:
  TeliaSonera press release 29.11.2005: TeliaSonera Finland announces new management team and turn-around program

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