Hong Kong's largest telecommunication carrier Pacific Century Cyberworks Ltd. (PCCW) has made 858 staff, or approximately 6 percent of its local workforce, redundant immediately and may make further cuts later in the year, the company said in a letter to employees Tuesday.
In the letter, Chairman and Chief Executive Richard Li said the cuts were necessary since there had been no significant improvement in Hong Kong's economy this year and that PCCW faces intensifying competition in the lead up to full liberalization of the fixed-line market in 2003.
"Accordingly, it remains vital that we continue our drive to become more efficient," said Li. "To meet this objective we have considered all alternatives."
The cuts are part of PCCW's transformation from a monopoly supplier to one of several competitors in a deregulated telecommunication market, Li said.
"We have reached the regrettable but unavoidable decision that there is no choice but to make further compulsory redundancies," he said in the letter. "Going forward, given the regulatory and market environment in which PCCW operates it is not possible to give an absolute assurance that there will be no further job losses."
After the layoffs, PCCW's Hong Kong-based payroll totals approximately 12,300 people, said Joan Wagner, a spokeswoman for PCCW. Worldwide, the company employs around 13,500 people at present, she said.
PCCW has endured a rollercoaster existence over the last year or so. On the upside, the company has formed a strategic alliance with Australia's dominant telecommunication carrier Telstra Corp. Ltd. and launched three joint ventures with Telstra -- an IP (Internet Protocol) network backbone company, a regional mobile phone company and a data center operation. The two companies bought the Asian operations of ailing Level 3 Communications Inc. in December.
But the company lost serious money in 2000 -- initial results showed an US$886 million loss, but after changes to local accounting principles which affected the way PCCW's August 2000 purchase of Hong Kong Telecom was registered, this was restated as a $16.6 billion loss.
The company retrenched 506 staff in December, 340 more in July, and 400 more jobs were lost in January at the its Network of the World Web TV operation.
The cost-cutting has had a positive effect on PCCW's results. Last week, the company announced it had returned to the black with a net profit of $243 million.
(Martyn Williams in Tokyo contributed to this story.)