OTE looks at further wage cuts to offset losses blamed on regulation

22 Mar 2012

Greek incumbent telco OTE is planning deeper wage cuts to help reduce its labour costs over the next three years by more than the EUR160 million (USD212 million) total targeted in a deal with its main employees union last year. Amidst Greece’s recession, OTE’s financial problems have been exacerbated by its domestic fixed line division losing around 100,000 customers per quarter, because, it says, alternative telcos can undercut its prices as they are not tethered by the strict regulation that the former monopoly must adhere to. In an interview with Reuters, OTE’s CEO Michael Tsamaz complained: ‘The regulator is causing OTE a bigger problem than the economic crisis. We feel like sitting ducks… the company can’t continue like that, it’s a matter of survival.’ He confirmed that the EUR160 million target will be raised, adding that management-union discussions would begin in the next two to three months. The CEO revealed that OTE will aim to reduce the benefits it pays on top of basic salaries and to abolish automatic yearly pay increases, in line with previous announcements from the company’s 40% owner Deutsche Telekom, which has stated that it must bring down the Greek wage bill to a more comparable level with subsidiaries in other European markets. OTE aims to cut its labour costs at the Greek fixed line unit from 35% of revenues to 22%-23% over the next three to four years, Tsamaz said. Last September OTE’s fixed line workforce agreed to take an 11% wage cut in return for a guarantee of keeping their jobs at the telco, which remains 10% state-owned. Tsamaz added he would stick to the deal, despite a new law passed last month as part of Greece’s EU/IMF bailout that scraps guaranteed jobs-for-life status for older employees in former monopolies including OTE. Given the new legislation, Tsamaz reasoned that it is now ‘in the labour union’s interest to maintain the deal we have for the next three years and mutually agree on further cuts.’

Greece, Cosmote