2degrees proposes to cut its workforce by 10%

Tuesday, 14 April 2020

2degrees says people are its biggest asset, but it needs to take decisive action.

2degrees is proposing to lay off 120 staff, which is 10 per cent of its workforce, because of the coronavirus pandemic.

Chief executive Mark Aue said that although people were its biggest asset, 'the harsh reality is that we must now take decisive action, reducing staff numbers or the hours worked for some roles'.

Vodafone NZ declined to comment on Tuesday on whether it was considering job cuts.

Spark also refused to comment on whether it was considering redundancies.

Finance Minister Grant Robertson is expected to announce additional support for businesses on Wednesday, which may influence some businesses' plans.

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Aue said that although 2degrees was an 'essential service', it was not immune to the impact of the coronavirus crisis.

'The New Zealand economy is being impacted in unprecedented ways by Covid-19,' he said.

'We are already seeing revenue impacts and, like all businesses, are in an unprecedented situation with uncertainty on how long it will last.'

Spokesman Mat Bolland said the company's 11 top executives, including Aue, had agreed to take a 20 per cent pay cut.

The telecommunications industry has been shielded from some of the impacts of the level 4 lockdown.

But Marko Bogoievski, chief executive of Vodafone NZ co-owner Infratil, noted on an analyst call last week that revenues from overseas visitors roaming on New Zealand mobile networks – and roaming revenues from Kiwis travelling overseas – had fallen to next to nothing.

The lockdown had also impacted retail sales, he said.

The increased use of broadband as people worked and entertainment themselves at home, had not had many financial benefits for the business, beyond reducing customer churn.

Aue said 2degrees was a resilient business and would continue to invest in its mobile and broadband networks.

'We owe it to our customers and staff to ensure we weather this storm, so we're making some difficult decisions now to avoid bigger changes later,' he said.

As well as proposing to reduce its headcount by 120, 2degrees was also planning to reduce its capital spending and defer 'non-essential' projects, freeze recruitment and renegotiate contracts with its suppliers, he said.

The company appeared to be tracking satisfactorily, prior to the coronavirus pandemic.

Owner Trilogy International Partners, which is listed on the Toronto stock exchange, reported that 2degrees had contributed an 'adjusted' operating profit of US$106 million (NZ$174m) in the 2019 calendar year, up 18 per cent from 2018.