“The sales performance is not the reason for reducing, the major reason for the headcount reduction is digitalization and simplifying the products and internal processes,” Miroslav Majoros, CEO of Telekom Romania group, told ZF in an interview.
“We are very satisfied with the second quarter results, especially in mobile, but we see signs of stabilization in fixed, as well.”
One reason for the layoffs is the need for the group to improve its financial results to allow it to continue its investments and to be able to raise salaries in certain departments.
“The issue is that last year our business results were very much influenced by the big issues from the past and especially we have to write of tens of millions of euros of bad debt and other issues. We had to repay some debts in the past, some loans in the past. Now the cash situation we have improved significantly (…) And of course, this is one of the drivers of the headcount reduction.”
The group needs a significant budget to be able to continue its investment plans, Majoros said.
Telekom posted EUR933 million service revenue in 2018, 4% lower than in the previous year and EUR136 million EBITDA, a decline of 15% over 2017. In all, the Telekom group’s reports with Romania’s Finance Ministry show 4.7 billion lei (EUR1 billion) revenue, RON784.5 milion net losses and RON6.2 billion debt, higher than rival RCS&RDS’s, whose debt stood at RON5.4 billion.
“The company wasn’t really profitable for many many years. I don’t remember when the company was profitable for the last time but at least the operational cash, which is basically driving the company, and it’s fueling the company we have to keep up and that’s why we have to improve the cash situation in the company.”
The plan to layoff almost 700 people or more than 10% of the total headcount targets mostly the administrative and back office jobs, and came as a result of the decline in the activity volume due to the simplification of the product portfolio of the group in the past two years, on the one hand, and the digitalization of a number of repetitive operations, which can be moved from people to software robots, on the other.
The headcount reduction program, which should be completed in October with the actual layoff of the almost 700 employees, entails costs in the range of millions of euros, as those to be let go will receive compensation, as stipulated in the collective labor agreement. Majoros would not provide details about the costs or the savings the layoffs would generate, merely saying they would amount to millions of euros a year.
(English version by Loredana Fratila-Cristescu)