|
The cuts will come over the next 12 months, the company said, and will consist of about 16 percent of Colt's workforce. Colt said that by slashing the jobs and re-organising how it operates on a European level, it would save around STG40 million a year.
The news follows reports earlier in the month speculating that job losses were on the way. Most initial estimates pegged the job cuts at around 1,000. The news also follows a number of job cuts in February this year, when the firm said it would trim its workforce by just over 200 and that it had plans to shed 156 temporary and contract workers. The February restructuring saved STG20 million annually, the company said.
As part of the firm's Europe-wide re-organisation, Colt said it would move to a "pan-European organisational structure," following the completion of the construction of its core network infrastructure. This move is where a portion of the STG40 million in cost savings will come. A provision of approximately STG25 million will be made in results for the quarter ending 30 September in respect of the expected cost of this programme, the company said.
Colt did not offer a geographic breakdown of where the redundancies will be made, leaving some doubt over the future of its Irish operations, where Colt employs around 40 people. Although the company "moth-balled" its Irish data centre earlier this year, at the start of this month the firm announced that the newest phase in its 120km network in Dublin had been extended to western regions of the city and county.
With the completion of that part of the network, Colt's investment in its Irish operations now amounts to around EUR30 million, making any pull-out in the Republic seem unlikely. The telecom has a 300 percent growth target for its Irish operations in 2002, which Ireland Managing Director Gary Keogh has said he expects to meet.
"COLT is taking these actions from a position of strength. We continue to win high-quality corporate business from current and new customers," claimed Steve Akin, Colt president and chief executive. "EBITDA is growing, capital expenditure is reducing, and we have cash and liquid resources of approximately STG1 billion." Akin reiterated Colt's goal of being cash-flow positive by 2005.
With the downturn in the telecoms sector, "it is prudent to take further action to ensure that its asset base remains aligned with the realities of the market," said Colt in a statement. As such, the firm will write down certain assets, resulting in a non-cash exceptional charge of approximately STG550 million in the results for the quarter ending 30 September.
Updating its expectations for the quarter ending in September, the business said it expects EBITDA (earnings before interest, tax, depreciation and amortisation) to improve to approximately STG17 million, compared with the STG14.7 million reported for the quarter ended 30 June. Turnover is expected to be at a "similar" level to the STG258.3 million reported for the quarter ended 30 June, Colt said, and it will increase by approximately 12 percent over the third quarter of 2001. Capital expenditure for the quarter is expected to be less than the STG111 million reported for the second quarter.
|
