French government fights telecom sector layoffs

The French government says it will not accept companies like Bouygues Telecom (Paris: EN.PA) and Vivendi's (Paris: VIV.PA) SFR using job cuts to cope with a price war now under way in the French mobile sector, and will present measures within two months that it hopes will prevent layoffs.

"We do not accept that jobs become the adjustment variable, especially in the telecom sector, which is regulated and inherently insulated from international competition," Fleur Pellerin, junior minister for the digital economy, told Reuters.

Apparently the government and French telecom leaders have already met, but "few concrete measures" were discussed during what were termed "productive" meetings, the story said.

Also, not every French telecom is threatening reductions of any sort. SFR said it plans to cut costs by €450 million ($552 million) and Bouygues has in mind €300 million ($368 million) worth of financial cuts and 556 "voluntary departure schemes." Vivendi said it's considering something similar, but announced no concrete plans. The country's biggest service provider, France Telecom (NYSE: FTE), is "not planning staff cuts," Reuters said.

The government would like to see no cuts and is considering whether to take another look at a 2008 "consumer-friendly" law that included, among other things, outlawing charging people for time spend on hold to customer service hotlines. Repealing that portion, sources told Reuters, is definitely under consideration.

That change might be connected to the fact that French telecom operators sent call center jobs to French-speaking Morocco and Tunisia to take advantage of lower costs. The government had suggested bringing them back home, but conceded it might be difficult.

"The issue is how can we provide the same service," France Telecom CFO Gervais Pellissier said in a June Reuters story.

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