DENIS O’BRIEN plans to trim his 4,500-strong Digicel workforce in the Caribbean by 10 per cent by the end of February as part of a major cost-cutting exercise at the telecoms group.
The company informed staff of the move yesterday, which will involve 450 employees leaving its 23 businesses in the region as part of a voluntary “separation” programme.
Digicel said the move was simply a matter of good housekeeping and was not a reflection of a downturn in the business or its subscriber base.
“We are now at a natural stage of our evolution to reassess our organisation, structure, processes and to fully capture operational efficiencies,” said Colm Delves, Digicel Group’s chief executive.
“This is particularly relevant in the current challenging economic environment where all companies, including financially strong and fully-funded companies such as Digicel, need to ensure that they have a lean and efficient structure to strengthen their financial position and protect plans for continued growth.”
Digicel is the largest mobile provider in the Caribbean with about seven million subscribers.
The redundancy plan applies to its operations in the Caribbean islands and Digicel’s operation in the central American country El Salvador. Its businesses in the Pacific Islands, Honduras, Panama and the British Virgin Islands are unaffected.
Mr O’Brien, who wholly owns the Caribbean operation, has overseen an investment of more than $3.4 billion (€2.58 billion) in Digicel’s 31 markets since its launch in 2001.
Digicel said workers would be entitled to six weeks’ pay for their first year of service and four weeks’ pay for each year after that.
In addition, Digicel has committed to pay 100 per cent of any half-year bonuses that were due to to be paid to staff at the beginning of April. It is also offering “extended healthcare coverage” and “outplacement” assistance to help workers find new jobs.
Staff have until January 26th to apply for redundancy and will be informed if they have been accepted by February 5th.
Digicel said it expected to complete the redundancy programme by the end of February.
A spokeswoman for the telecoms group said compulsory redundancies would be implemented if the required number of voluntary departures was not achieved. “We are pretty confident that we will reach the 10 per cent [voluntary] figure,” she added.
Accounts for Digicel Group for the year to the end of March 2008 show that it trimmed its pretax losses to $47.7 million compared with a deficit of $71 million a year earlier. Its revenues rose by 38 per cent to $1.56 billion, while operating profit increased sixfold to $240 million. It had 6.54 million subscribers at the end of March 2008.
Digicel was pushed into the red last year by interest payments of $296.4 million, relating to the refinancing of Digicel Group by Mr O’Brien in February 2007.
This resulted in senior debt of $1.4 billion being secured by the mobile phone group.
