Global IP and data services provider Equant intends to slash 20 per cent, about 3000, of its global workforce in an attempt to stem the cash drain resulting from its merger with Global One.
Approximately 1500 of its 13,300 employees worldwide will be laid off by the end of the year.
The axe is not expected to fall as hard on Equant's Australian operations, with the company denying that it will lose the equivalent of 20 per cent of its local staff.
Equant denies the cuts are the result of a weakness in the company's focus market, with officials saying the plan confirms earlier statements regarding workforce reductions that were in fact anticipated as a direct consequence of Equant's merger with Global One.
"When we announced completion of the merger less than two months ago, we committed ourselves to a rigorous timetable for integrating the organisations involved," said Didier Delepine, president and CEO of Equant. "The action we have announced is consistent with that goal and indeed the underlying rationale for the merger."
"Decisions such as these, while difficult, are nonetheless essential for Equant to maintain and strengthen its leadership position in the corporate data market," he added.
Equant announced last November that it would achieve a minimum of $300 million per year in operating cost savings by the third full year of operation. These reductions are designed to save about $100 million per annum.
As a result of the workforce reduction, Equant will incur a one-time charge of between $40 million and $50 million for severance and related costs during 2001. Under its agreements with France Telecom, the telco will meet half of these costs.