TPSA ready to take on unions

Telekomunikacja Polska (TPSA) expects to wrap up talks with its powerful trade unions by mid-February to cut some 10,000 jobs as part of the dominant telecom operator's restructuring plans, Witold Rataj, TPSA's spokesman said last week. Speculation that TPSA was having problems negotiating with its unions surfaced last week after the firm's supervisory board fired Chief Financial Officer George Storożyński on Jan. 25. Storożyński, who was appointed CFO last October, was working on the firm's strategy to cut jobs, restructure debt and sell non-core businesses. In December he told the Wall Street Journal Europe that 12,500 jobs would be eliminated in 2002. But Marek Józefiak, TPSA's chief executive officer, later corrected the figure and said 10,000-12,000 jobs, or about 20% of TPSA's workforce, would be cut. TPSA's trade unions threatened to strike after the conflicting reports were published, saying that the redundancies would violate the terms of the contract signed by TPSA's strategic investors France Telecom and Kulczyk Holding during their initial purchase of the company's shares in July 2000. Rataj said Storożyński was fired because his "style of work was not advisable for (the) fast and smooth functioning of the company" and that his dismissal did not indicate that there were problems with the firm's restructuring plans. "All of the restructuring procedures are to be followed in the shape and form that they were before that dismissal," Rataj said. He added that TPSA was looking for a new CFO but said he didn't know when the firm would appoint one. The layoffs are seen as an important part of TPSA's efforts to become a more efficient, customer-oriented firm by continuing to slash its bloated workforce of more than 57,700. TPSA must reach an agreement with its unions on the number of job cuts and financial compensation for terminated employees. According to the undisclosed terms of the firm's privatization agreement with the France Telecom-led consortium, layoffs were not to happen until 2004. Such agreements, however, usually give investors the possibility of slashing jobs if they can agree with trade unions about compensation for terminated employees. France Telecom, which has pushed hard for TPSA's turnaround, and Polish-owned Kulczyk Holding together own 47.5% of the company. They have an option to buy 2.5% plus one share of TPSA this year, which would give them a majority stake. "It seems like France Telecom wants to be quite aggressive here and its idea is that it should be a one-time cut (rather than gradual job eliminations)," said Witold Samborski, director of research at Fortis Securities in Warsaw. In December TPSA said it planned to create a zł. 750 million ($183 million) reserve for its employment restructuring costs in 2002. Last year, TPSA reduced its headcount by 9,000 through both layoffs and employee transfers to other companies owned by the telecom concern. Terminated workers received severance payments based on their number of years with the company, salary and the unemployment rate in the regions where they worked, Rataj said. He declined to state the total amount TPSA paid its terminated workers in 2001.