ECONOMY

OTE to meet voluntary exit target of 3,600

Former state telecoms monopoly OTE will meet the target of its voluntary retirement plan – part of efforts to trim labor costs and improve profitability – an industry source close to the deal said yesterday. The source said about 3,600 of 5,200 eligible staff had submitted applications to participate in the program ahead of a Friday deadline, meeting the goal set by management in July. OTE’s viability in a liberalized European telecoms market depends on trimming its work force because labor costs make up one-third of the group’s total, double the industry average. «With the information we have so far, it seems OTE will achieve its (voluntary redundancy) target as the number of those already participating exceeds 3,500 employees,» the source told Reuters. OTE hopes to cut roughly one-third of its 16,000 staff to turn around its struggling fixed-line operation as it takes advantage of new technologies. «Many employees, after recent organizational changes at the group, are expected to apply in the final days,» the source added. OTE has said its early retirement plan is designed to stave off bankruptcy at its fixed-line unit. The group has operations in Romania, Bulgaria, Serbia and other Eastern European countries. Chief Executive Panayis Vourloumis said last month the cost of the voluntary redundancy program, which is estimated at about 1.5 billion euros ($1.80 billion), would be accounted for in 2005. The government, which retains management control of OTE with its 38.7 percent stake, has said it will finance one-fifth of the cost by transferring a 4 percent stake to OTE’s main pension fund, TAP-OTE. The government has said its part-funding is not expected to face obstacles from the EU. The group’s main union, OME-OTE, said it expects up to 4,200 employees to participate in the main voluntary redundancy plan. Apart from OTE’s main redundancy program, another early retirement scheme was launched at the start of the year, taken up by 600 employees out of 800 targeted. Shares in OTE, boosted by a Merrill Lynch «buy» recommendation yesterday, gained 2.01 percent to end the day at at 17.22 euros.