Wednesday, July 11, 2012

Maroc Telecom to Shed 2000 Staff to Boost Profits

Mixed news from Maroc Telecom. Bad news for 2000 staff, and good news for shareholders. Morocco's biggest telecom group, has asked for voluntary redundancies to cut its workforce by at least 11 percent as the Vivendi subsidiary tries to boost margins. This comes at a time when Morocco is in desperate need of employment.

Analysts said the plan, launched this month, may result in annual savings worth at least 300 million dirhams ($33 million) after costs to pay off the 1,500-2,000 staff Maroc Telecom is targeting out of a 13,700-strong workforce.

"The plan will affect mostly operations in Morocco and aims mainly to convince staff close to retirement age to leave," said one of the two sources, both of whom spoke on condition of anonymity. Maroc Telecom was not available to comment.

Earlier this month, Vivendi's French telecom unit SFR unveiled plans to make 500 million euros ($613 million) cost cuts in 2013 on top of the 450 million targeted for 2012 as it grapples with low-cost competition.

"Maroc Telecom is implementing a broader strategy by Vivendi to cut costs. The telecom market in Morocco is reaching maturity, so operating costs must be reduced to protect shareholders' value," a Casablanca-based analyst said.

"Wages are by far the biggest capex for Maroc Telecom and the redundancy plan should enable Maroc Telecom to keep its net margin at 40 percent," the analyst said.

Maroc Telecom, Vivendi's second-most lucrative subsidiary after SFR, has seen revenue growth slow mostly because of growing competition in Morocco, its main source of income.

The company, which has subsidiaries in Burkina Faso, Gabon, Mali and Mauritania, has about 2,700 employees outside Morocco.

"There are concerns about revenues from Africa declining especially from Mali where the unrest has yet to show its impact on telecom operators active there," a trader said.

Maroc Telecom's net profit fell 15 percent to 8.1 billion dirhams ($968 million) in 2011 after turnover shrank 2.5 percent to 30.8 billion. ($1 = 8.9731 Moroccan dirhams = 0.8160 euro)


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