T-Mobile International AG announced a “savings and efficiency program” that will see the European carrier slash 2,200 jobs and reduce its handset range in Europe by almost half. The program, focused on the carrier’s operations in Germany, the United Kingdom, the Netherlands, Austria and the Czech Republic, aims to save the carrier $1.3 billion by the end of 2006.
T-Mobile said the personnel reductions would save $1.9 million by end-2006. About 1,200 of the jobs will be in Germany.
About 85 percent of the savings, or $648 million, will come from better managing its handset subsidies, streamlining its handset procurement and increasing its handset bundling, T-Mobile said.
The German-based company said that of the $1.3 billion in savings, it plans to invest up to$648 million to drive growth initiatives, such as developing the mobile Internet, offering more attractive wireless tariffs and further developing its GPRS, UMTS and wireless local area network platforms.
“The course is clear: profitable growth at reasonable costs instead of growth at any price; simple and inexpensive tariffs coupled with realistic handset prices,” said Rene Obermann, chief executive officer of T-Mobile International. “We already began with this several months ago in our most important European markets, primarily in Germany. These measures allow us to continue to offer an attractive handset portfolio at lower costs, while at the same time giving us more maneuvering room for tariff offensives.”
The news follows only 1.4-percent growth from T-Mobile Germany in the third quarter of 2004. Market watchers said European carriers are under pressure from market saturation, higher costs of acquiring customers, and more competition from mobile virtual network operators. “Here we have it: a clear indication that the heat is one for mobile operators,” said Dan Bieler, research director at U.K.-based consultancy Ovum. “The basics are simple: as the top-line growth slows, operators have to cut costs to maintain margins and reinvest savings to boost long-term growth.”
