Etisalat to cut 300 UAE jobs

Etisalat has announced that it will be making employees redundant in an attempt to control its human resource expenditure

Etisalat, the UAE’s largest telecom operator, currently employs more than 10,000 employees that are costing the company approximately AED 4 billion annually. The management has now decided to lay off 300 workers on the basis of age, performance and productivity, amongst other factors.

Etisalat is facing pressure, as a result of the rising success of rival operator Du, which holds a market share of 37 percent, and is becoming relatively more popular and profitable in the UAE. Du’s profits have reportedly more than doubled over the last few months, with strengthening revenue streams and a solid customer base.

The lack of adequate anti-trust legislation initially enabled Etisalat to hold a dominant position, monopolizing the market with little or no competition prior to the arrival of Du in 2007. The landscape totally changed after Du started aggressively marketing and attracting customers with its lower tariffs and flexible plans.

However, the management at Etisalat is denying any serious cost or competition pressures, and has referred to the recent decision to retrench workers as a natural process of internal “reorganization”.

It is rumored that the employees in the engineering and sales divisions will be most affected, and that some people have already been laid off prior to the official announcement. It is not known whether the job cuts will affect the UAE nationals who are on Etisalat’s pay roll, and who account for about 33 percent of its total work force.

Etisalat has also decided to expand offshore in order to become a more global operator. Efforts to acquire a reported 40 percent stake in Kuwaiti operator Zain for USD 12 billion are expected to materialize in the near future, subject to shareholder approval of the Kuwaiti company.

Despite mounting employee tension within the ranks of Etisalat, industry optimists such as Simon Simonian, a telecoms analyst with Shuaa Securities are viewing this step positively and as a move towards Etisalat becoming a “leaner and more efficient company”.