Vivendi's SFR Telecom Unit Plans to Cut 856 Jobs

Earlier this week via a voluntary departure plan, Vivendi's SFR telecom unit revealed plans to cut 856 jobs as it restructures to cope with tougher competition in France. Unions voiced fears that the cuts were a step towards a sale of France's second biggest mobile operator and swiftly condemned the move as unacceptable given the more than three billion euros ($3.88 billion) in profit that SFR should generate this year.

In Morocco and Brazil, Vivendi which is led by longtime Chairman Jean-Rene Fourtou, is seeking buyers for its telecoms operations as part of a strategic overhaul hoping that it will cut debt and revive its flagging share price. Since the summer, Vivendi has been exploring ways to reduce its exposure to investment heavy telecoms and focus more on its music and pay-TV businesses.

Triggering a price war in France, SFR which is touted as being Vivendi's cash cow for a long time now, has been hit by the arrival of a new low cost mobile player Iliad. Speculation has swirled around Vivendi's plans for SFR, with French media reports suggesting talks were underway on a tie-up with local cable operator Numericable or a sale to Iliad.

In an interview, SFR's Chief Executive Stephanie Roussel acknowledged that interested parties had approached Vivendi about SFR, but said the group was not out searching for a buyer.

"Although there is a broader reflection on telecoms going on in Vivendi, there is no active initiative on Vivendi's part consisting of going to market to find a buyer for SFR. SFR is not for sale,” added Roussel in a statement.

In the meantime, while streamlining its organization in an effort to adjust to the tougher market in France, SFR is revamping its fixed and mobile offers. SFR will cut 1,123 jobs and create another 267 such as online sales staff and Web community managers. By the end of the third quarter, the newcomer Free Mobile had taken 6.4 percent of the mobile market.