Telecom offloads 266 workers

By PETER GRIFFIN

Telecom plans to transfer hundreds of its staff to equipment suppliers Alcatel and Lucent as part of major outsourcing deals it will finalise next month.

The move aims to cut network-related costs by tens of millions of dollars.

A total of 266 network planning and operations staff will be removed from Telecom's books by June - about 200 will go to French equipment maker Alcatel, the rest to American network specialist Lucent.

A memo to Telecom staff from network heads Rhoda Holmes and Steve Fuller, obtained by the Business Herald, said there would be minimum disruption for staff destined for a new employer.

"The day after transfer, you will be sitting in the same seat, doing the same role as previously," the memo read.

But there is an ominous warning for staff joining Alcatel.

"Alcatel is planning a review of its current organisation and business models over the six-month period following transfer of Telecom staff.

"An outcome of this review could result in rationalisation of some functions."

Transferred staff culled in that reorganisation would be paid redundancy "as per your existing employment contract with Telecom".

Those unhappy at the prospect of acquiring a new boss have no alternative but to leave empty-handed.

"If you are offered an Alcatel employment contract and decide not to accept it, you will not be eligible for redundancy," network staff were told.

The personnel changes are part of Telecom's strategy to farm out management of its network development and operation, a process telcos worldwide are undertaking.

Last year Alcatel pipped rivals Lucent and NEC to win the contract to upgrade Telecom's network, a deal that will be worth hundreds of millions of dollars over several years. Alcatel would not comment on the planned staff transfer.

Telecom will also look to sign a deal with Lucent late next month outsourcing development and management of its CDMA mobile network. That will mean Telecom will have outsourced management of its networks across the board - Ericsson for its ageing analogue mobile network, Alcatel for its fixed-line network, EDS for its IT systems and Lucent for next generation mobile.

The deal with both vendors will initially be for five years, with rights of extension for a further five years.

Telecom has largely relied on aggressive cost-cutting to prop up its financial performance in a flat market. Spending on networks has been cut as a result.

In the year ended last June, Telecom spent $778 million on capital expenditure, a huge drop on the year before.

Late last year it cut its capex forecast for the current year to $730 million, but that has now been trimmed to $650 million.