Finland’s Nokia plans to cut 1,233 jobs at its French subsidiary Alcatel-Lucent International, equivalent to a third of the unit’s workforce, the group said on Monday, confirming an earlier Reuters report.
The announcement has political resonance in France as Nokia bought the unit five years ago on condition it would keep jobs.
Nokia, which competes with Ericsson and Huawei on lucrative 5G networks, said in a statement the staff reduction was needed because of significant cost pressures.
Nokia said in April it aimed to cut costs by EUR 500 million (roughly Rs. 4,260 crores) by the end of this year compared with full year 2018, with EUR 350 million (roughly Rs. 2,981 crores) targeted to come from operating expenses and EUR 150 million (roughy Rs. 1,277 crores) from sales costs.
When Nokia bought Alcatel-Lucent International, it committed to preserve jobs in France for two years and expand research and development teams in the country to make it a resource within the group for the next generation of mobile Internet technology, or 5G.
The French research and development teams are particularly affected by the job cuts.
Nokia became free from such commitments this month, a spokeswoman said.
Contacted by Reuters, the French government had no immediate comment.
“Nokia will continue to be a major employer in France with a strong foothold in R&D, sales and services, which will enable us to develop and execute our customers’ projects efficiently,” said Thierry Boisnon, president of Nokia in France.
Nokia employs 5,138 people in France, of which 3,640 work for Alcatel-Lucent International.
The entity was part of the Alcatel-Lucent group before Nokia bought it in 2015 in an all-share deal that valued the French business at EUR 15.6 billion (roughly Rs. 1.32 lakh crores) euros.
The merger was scrutinised by the French government and its then economy minister Emmanuel Macron, who is now president.
“It’s just a low-cost strategy that is being implemented, contrary to all the commitments made by Nokia in France. Nokia is laughing at everyone, first and foremost the French government,” the CFE-CGC union at Nokia said on its website.
© Thomson Reuters 2020