Telecommunications service provider Finnet plans big job cuts

Nearly half of employees could face axe

Jan-Erik Frostdahl

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Finnet, a telecommunications service provider owned by local Finnish telephone companies, announced on Wednesday that it plans to sharply reduce its personnel. Under the cost-cutting measures, nearly half of the company’s 616 employees could go. Negotiations with personnel on the targeting of the job cuts are to begin next week.
      In the first half of this year, Finnet recorded losses totalling EUR 11.5 million. The company hopes to show a profit by the end of next year.
      Finnet has been suffering from intense price competition in the mobile phone business. Finnet’s mobile telephone services, which it sells under the DNA brand, brought a turnover of EUR 148 million in the January - June period, which is 80% of the company’s entire net sales figure.
      The mobile phone operations showed a loss of EUR 1.8 million in the first half of this year, which was an improvement over the EUR 4.9 million in red ink at the same time in 2004.
      Jan-Erik Frostdahl, who started as CEO of Finnet in early September, did not want to say how the planned cuts would be targeted. However, it is expected that the job cuts will have their greatest impact on mobile phone operations, because that is where the number of personnel is highest.
      Frostdahl also says that DNA would hold back on introducing new types of mobile services. However, he adds that the company will not delay the introduction of third generation mobile phone services, and that the UMTS network will be launched for Christmas.
     
Finnet Com, the local telephone company of the Helsinki region, will not be a target of the cutbacks, nor will Suomen 3KTV, which produces digital television services.
      DNA’s customer services are also to remain untouched; long waiting times for mobile operators’ telephone services have brought considerable negative customer feedback recently.
      The full extent of the planned job cuts came as a surprise to DNA shop steward Petri Halonen. "Certainly there were signs in the air that something was going to happen. But the figure that was made public undoubtedly surprised us all."
      DNA’s competitors have also been cutting jobs to save money. After discussions with personnel, TeliaSonera eliminated 330 jobs, and further cuts are expected in the coming months.
      In May, Elisa announced plans to dismiss a far smaller number of middle-management personnel.
     
In addition to the job cuts, Finnet plans to institute structural changes, involving consolidation of mobile telephone operations.


Previously in HS International Edition:
  TeliaSonera to dismiss no more than 330 people (12.14.2005)
  Employees consider taking TeliaSonera to court over job cuts (17.2.2005)

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