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April 6, 2016
Nokia has announced it will be reducing its workforce to cater for the Alcatel-Lucent integration and future market challenges or trends.
The Finnish vendor’s acquisition of ALU was completed in January, and it has pledged to make up €900million in what it calls “operational cost synergy”. Put simply, it wants to get rid of redundant costs where Nokia and ALU have similar or identical product offerings or business units.
To do so, it looks like Nokia will be laying off staff over the next three years. According to Nokia, reductions will be focussed on areas where there are overlaps, like R&D, sales and corporate functions. CEO Rajeev Suri said Nokia’s commitment to reducing its duplicated opex was going to have human consequences.
“When we announced the acquisition of Alcatel-Lucent we made a commitment to deliver EUR 900 million in synergies – and that commitment has not changed,” he said. “We also know that our actions will have real human consequences and, given this, we will proceed in a way that is consistent with our company values and provide transition and other support to the impacted employees.”
In a statement to Telecoms.com, a Nokia representative downplayed the announcement and said the news of the redundancies is an extension of its previously stated goal of achieving operating cost synergies.
“Nokia has said publicly on a variety of occasions that we would have different areas from which to extract in cost synergies and to streamline functions as a result of the acquisition,” they said. “Today’s announcement merely reflects an important step toward delivering on those commitments that we have flagged previously on multiple occasions.”
While Nokia cited an October announcement relating to cost streamlining, today’s announcement looks like the first time it has directly stated redundancies will be one of the means by which it seeks to achieve its aims. Its October statement limited itself to hinting at a possible streamlining of “overlapping products and services”.
Nokia did not disclose the number of jobs at risk, instead saying the following in response to a Telecoms.com request for comment:
“Our focus is on delivering our cost saving targets, and we are not disclosing any global headcount reduction target as we are only starting the country specific processes in the impacted countries according to local legislation and practices.”
At the time of writing, Nokia hadn’t commented on claims made by the Financial Times that as many as 3,100 jobs are being culled in Finland, Germany and France.
Update – 16:04 06/04/2016
Nokia has since confirmed to Telecoms.com the maximum number of redundancies will be 3,100 across France, Germany and Finland. Speaking to Telecoms.com, a Nokia spokesperson said: “The planned maximum number of job reductions is 1,300 jobs in Finland, 1,400 jobs in Germany and 400 jobs in France. However, we are only starting country specific processes, and we expect the reductions to take place between now and the end of 2018.”
Nokia refused to disclose what percentage of the €900m in cost savings will be made up by redundancies.
Bloomberg, meanwhile, estimated as much as 15% of the company’s 104,000 workforce is targeted for redundancy, citing people familiar with the matter.
Tim is the features editor at Telecoms.com, focusing on the latest activity within the telecoms and technology industries – delivering dry and irreverent yet informative news and analysis features.
Tim is also host of weekly podcast A Week In Wireless, where the editorial team from Telecoms.com and their industry mates get together every now and then and have a giggle about what’s going on in the industry.
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