Unions cite the blues

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Telecoms trade unions disagree with the claim, repeatedly trotted out by pundits over the past six months but given less credence by the week, that the mobile industry is immune to the economic downturn.

Major redundancies are expected from most airtime service providers in the coming months. The situation is grave, according to Connect and the Communication Workers Union (CWU), both of which have recently engaged in record numbers of employer discussions and seen memberships peak as workers across the industry fear for their futures.

Fixed line service providers have been hit harder than mobile players. Ahead of a debilitating 81 per cent fall in pre-tax profits to the end of December, BT announced 10,000 job cuts – a figure widely expected to rise to 13,000 as the year unravels. BT’s downward spiral springs from closures in the finance industry, prompting cancellation of customer accounts.

In mobile, Vodafone has already confirmed 150 jobs are to be axed in Ireland and more will go if it announces, as expected, the outsourcing of some technical work in line with its global cost cutting strategy – to cut £1 billion in operating expenditure across its units by March, 2011.

Meanwhile, former O2 emergency services communications provider Airwave, now owned by investment company McQuarrie, has announced it is to cut 10 per cent of its 1,000 strong workforce despite the perceived strength of the business.

T-Mobile, Orange and 3 are said to be looking at dispensing with their bases of contract workers. O2 is the only mobile provider with robust-enough financial results not to draw genuine suspicions of job cutting from the unions.

Connect and the CWU have been hugely busy negotiating voluntary redundancy packages on behalf of such firms, although BT is understood to be struggling to reach voluntary redundancy targets and will set about making compulsory redundancies.

Connect general secretary Adrian Askew (pictured left) says: “The story is grim. There has been an awful lot of restructuring across the telecoms industry globally. Companies have been taking contracts with little margins, trying to compensate for the loss of traditional voice traffic. Margins are being squeezed out of existence.

“Big customers have tended to be financial institutions, and banks are buying nothing right now. On top of that, in times of recession, all kinds of businesses shut down and people don’t move house, or build new houses, so there is no new business and old business is at risk. Plus, fixed lines are being substituted by mobile. Infrastructure is not being built out.”

Under regular economic circumstances a shrink in the fixed line sector would typically lead to opportunities for new mobile connections. Even this opportunity, however, is limited and tests margins.

“For mobile, the problem is the squeeze on costs. Customers are far more careful with their spend and high street retail stores are heavily marketing their cheaper packages. People are insisting on only buying what they need. And price warfare has broken out again,” says Askew.

Of all the fixed and mobile network operators, the unions expect O2 to remain most resilient during the recession.

Neither Askew, nor his counterpart at the CWU, Ian Cuthbert (pictured right), has received word of impending cuts at O2, unlike the rest of them. This could change, however.

Full article in Mobile News issue 433 (February 23, 2009).

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