Alcatel to axe 5,000 jobs, exit non-profitable markets

Global telecom equipment maker Alcatel Lucent (ALU) on Thursday said it will reduce headcount by 5,000 globally and exit or restructure non-profitable markets to save Euro 1.25 billion by the end of 2013.

The company announced series of measures to reduce its costs after it reported a net loss of Euro 254 million for the second quarter which ended on June 30, 2012.

Its revenues during the quarter declined by 7.1 per cent at Euro 3,545 million compared to Euro 3,817 million it reported for the same period a year ago.

"Despite having demonstrated our ability to deliver operational profitability, it is clear from the deteriorating macro environment and the competitive pricing environment in certain regions challenging profitability that we must embark on a more aggressive transformation," ALU CEO Ben Verwaayen said in a statement.

ALU launched 'The Performance Programme' to achieve an additional Euro 750 million cost reduction, bringing total savings to Euro 1.25 billion by the end of 2013.

The company announced plans to reduce global headcount by around 5,000 people, exiting or restructuring unprofitable managed services contracts along with associated headcount and exiting or restructuring in unprofitable markets.

ALU employs 10,000 people in India and manages half of fixed and CDMA wireless lines in the country. It could not be immediately ascertained whether the announcement will have any impact on its Indian unit.

"This is global headcount reductions plan. We will not comment at this time on where these reductions will be made. We will communicate more detail about this in September," an ALU spokesperson in India said.

Photograph: Visitors walk at the Alcatel-Lucent booth at the Mobile World Congress in Barcelona.
Credit: Albert Gea/Reuters.