Atlantic said it has installed DSL (Digital Subscriber Line) Internet technology in 331 of Deutsche Telekom's local
exchanges, putting it well ahead of schedule. It has also begun to roll-out DSL in the Netherlands, with 17
exchanges equipped.
Monday January 22, 11:33 AM
Atlantic cuts jobs to speed move to profit
(Adds total employees in paragraph 1, location of job cuts in 3, analyst comment in
6, 11-12, funds in 7)
By Richard Baum, UK telecoms correspondent
LONDON, Jan 22 (Reuters) - Britain's Atlantic Telecom Group Plc on Monday said
it was cutting its 1,200-strong workforce by almost a third as it joins other smaller
European telecoms firms seeking to move into profit faster.
The 350 job cuts will help it save 30 million pounds ($43.88 million) next year and
ensure it starts seeing positive cash flow earlier than analysts' predictions of 2004,
Executive Chairman Graham Duncan said.
The cuts affect mainly its residential sales and support staff in London and Manchester.
The company was already scaling back its residential operations to concentrate on business customers in the UK
and Germany, and has stepped up the plan amid investor pressure on unprofitable operators to rethink their business
plans.
"It's all to do with focus in this environment," Duncan told Reuters. "We believe the route to profits needs to be
shortened."
Annual savings of 30 million pounds would move Atlantic into positive earnings before interest, tax, depreciation
and amortisation (EBITDA) in 2003, according to Investec Henderson Crosthwaite Securities. Duncan declined to
give an estimate.
FUNDS IN PLACE
He said the company has sufficient resources to finance its expansion until it turns EBITDA positive, with 190
million pounds of available funds and 100 million pounds of unused vendor financing.
Shares in Atlantic were up 4.5 percent at 115 pence in late morning trade, compared with a six percent gain just
before the announcement. The stock is worth less than a tenth of its 2000 peak, even after rising 15 percent since
the start of this year.
Atlantic follows smaller European operators such as Viatel Inc and Redstone Telecom Plc that are cutting jobs or
scaling back their expansion plans to move into profit sooner.
It is almost impossible for such companies to raise money in the debt and equity markets because of the change in
sentiment that triggered the slump in technology and telecoms shares.
"As much as there might be optimism over the price of raising fresh funds with U.S. interest rates falling, in reality a
lot of operators have cut back their business plans," said Investec analyst Christian Maher.
"They are taking a bit of a time out to bed down their existing operations and make sure they don't need to raise
more funds."
Atlantic, in which Marconi Plc has a 18.7 percent stake, also announced fourth-quarter results showing a 14 percent
rise in directly connected business lines in the UK.
It said it has reached an agreement to use the national fibre-optic network of Carrier1 in Germany, where Atlantic is
competing with Deutsche Telekom AG to provide fast Internet services.
Atlantic said it has installed DSL (Digital Subscriber Line) Internet technology in 331 of Deutsche Telekom's local
exchanges, putting it well ahead of schedule. It has also begun to roll-out DSL in the Netherlands, with 17
exchanges equipped.
Duncan said Atlantic was targeting around 600 exchanges in the UK, where the start of local exchange competition
has been held by disputes with British Telecommunications Plc , using a mix of DSL and wireless Internet
technology. |
