OSLO, Norway, Oct. 15, 2002 (PRIMEZONE) -- As a result of Telenor's (Nasdaq:TELN) cost and efficiency initiatives, Telenor Mobil will be reducing the workforce by 216. Employees were informed of the reduction in the workforce on Tuesday morning. Those affected will be offered redundancy packages in the course of the week. Telenor Mobil currently has approx. 1600 employees. The workforce adjustments are a result of Telenor's corporate cost cutting and efficiency project, Delta 4, and is related to the economic situation and the market forces affecting Telenor Mobil.
Telenor Mobil has experienced tremendous growth during the past ten years. The resulting focus on growth and development has been hugely demanding on resources. The period of rapid subscriber growth is now ending, whilst revenue growth from SMS and other mobile services is similarly levelling out. The period of growth has now been replaced by a more normal phase of operation. This means that Telenor Mobil's level of expenditure has become too high while the situation has arisen where there is a surplus capacity in the workforce.
"It is painful to have to revert to reducing the workforce in a company with so many highly qualified employees who have contributed to Telenor Mobil's success. However, when the trend of revenue growth ceases, expenditure must be reduced correspondingly. We have undergone immense cost cutting initiatives in all other areas of expenditure, however, we are unfortunately unable to avoid reducing the number of employees as well," said Telenor Mobil's Managing Director, Ingvild Myhre.
"By undertaking these adjustments, the organisation aims to adapt to the challenges of the current market situation. Telenor Mobil has been at the forefront in the industry throughout the extensive period of growth. Our ambition is to sustain and strengthen this position in a developed market where the mobile phone is common to all," Ingvild Myhre said.
Cost cutting measures are simultaneously being undertaken elsewhere in the Telenor Group. Excluding the workforce reductions in Telenor Mobil, Telenor has announced approximately 1000 excess positions, mainly within Customer and Directory Enquiry Services and Telenor Business Solutions' Operational Services division. Surplus employees will be offered assistance to find new positions either within or outside Telenor, and may be offered redundancy packages.
After the first six months, cost savings have amounted to approximately NOK 400 million, while the savings for the entire year are expected to constitute approximately NOK one billion. The aim is to reduce expenditure by NOK four billion gross by the end of 2004 compared to the level of expenditure in 2001. The cost reduction programme, Delta 4, was initiated as a result of the need to improve the corporation's profitability. Delta 4 focuses on six areas wherein synergies and savings are to be realised across all business areas within procurement, finance, customer contact, information systems, staff and support apparatus and network structure and network operation.
179 of the 216 employees affected by the reduction in the workforce are located at Fornebu. The remaining 37 employees affected are located in smaller numbers across Telenor Mobil's 15 offices outside Oslo.
Employees who are offered redundancy packages are given until January 6, 2003, to decide whether to accept.