Telefonica says job cut plan to cost 2.7 billion euros

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Spanish telecoms giant Telefonica said on Friday its plan to shed 6,500 employees over the next three years will cost it 2.7 billion euros ($3.8 billion) before tax.

The employees represent about 20 percent of the workforce of Telefonica in Spain, where the group has about 30,000 staff out of a total global workforce of 269,000 people.

The former state monopoly blamed the redundancies, first announced in April, on falling sales in Spain, which is struggling with its worst economic crisis in decades.

The amount works out at 415,000 euros per employee and will be listed as a non-recurring labour cost in the current financial year, it said in a statement Friday.

"The results of the company in the coming years will be helped by greater efficiency in personnel costs," it said.

Telefonica announced on July 8 it had reached a deal with unions to lay off 6,500 employees over the period 2011-2013, and promised the government that it would cover all the costs.

Finance Minister Elena Salgado had expressed astonishment over the planned layoffs at a profitable company as Spain copes with an unemployment rate of more than 21 percent.

Telefonica posted a record net profit of 10.2 billion euros in 2010, a 30.8 percent jump over the previous year as weakness in Spain was offset by strong growth in the rest of Europe and Latin America.

It is the second biggest telecommunications operator in Europe behind Britain's Vodafone.

At the end of March Telefonica had 285.6 million customers in the world, or 6.1 percent more than a year earlier.

© 2011 AFP

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