January 10, 2019 / 9:33 AM / 3 months ago

UPDATE 1-Telecoms operator Proximus to cut 650 jobs in 240 mln euro cost-saving plan

(Adds detail, background, CEO and analyst quotes)

Jan 10 (Reuters) - Belgian telecoms operator Proximus plans to save 240 million euros ($277 million) by 2022 through a cost-cutting plan that will involve a net headcount reduction of 650 jobs, it said on Thursday.

Proximus plans to cut 1,900 jobs while recruiting 1,250 to grow its ICT and digital activities.

“We want to accelerate the transformation of Proximus to keep up with the challenges of the increasing digital world and to secure the future of the company,” Chief Executive Dominique Leroy said in a statement.

Leroy was summoned to meet Belgian Prime Minister Charles Michel on Wednesday after media reports on the job cuts.

The Belgian Government owns 53.5 percent of Proximus and the loss of so many jobs would be bad news before elections scheduled for May.

“We stress that the political context is extremely sensitive and it is not obvious that politics will not influence the capacity of Proximus to implement its plan,” ING analyst David Vagman wrote in a note.

In addition to reducing headcount, Proximus plans to further simplify and automate its business, it said.

Shares in the company were down 1.8 percent at 0844 GMT, underperforming the blue-chip BEL 20 index, which was down 0.8 percent.

KBC Securities analyst Ruben Devos said investors could have expected bigger savings than the projected 240 million euros in gross savings over three years.

“In terms of net savings you would end up with 70-110 million, I think. That’s 2-3 percent of the overall cost base,” he said.

Reporting by Alan Charlish in Gdynia Editing by David Goodman

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