Qwest Communications International Inc. (Q) has laid off an unspecified number of people, including managers, from its Business Markets Group, despite the carrier’s reliance on that division to help it weather the tough economy.
Qwest spokesman Ted Wietecha on Friday confirmed rumors that Qwest has cut jobs in the midsize unit of the Business Markets Group. However, contrary to speculation, Qwest did not axe 1,100 workers, Wietecha said.
“I can tell you those numbers are wrong,” he said. The 1,100 “is significantly higher” than the real total, which he could not divulge.
In addition, the mid-markets group is “not wiped out,” Wietecha said. He also could not confirm which regions were affected.
As for why, Wietecha said the layoffs come as Qwest looks for “ways to be more effective and more efficient … while reducing costs.”
“It’s pretty much standard business. It’s not a significant realignment in the sense of anything drastic.”
Wietecha also emphasized that customer service and agent support won’t be affected.
Qwest said in its latest earnings report that it’s counting on the Business Markets Group, which sells to enterprises, to help it boost performance over the next few quarters. Qwest is making a name for itself as a hosted services provider to big businesses and government agencies, a strategy it hopes will translate into big bucks over the coming years.
Nonetheless, because of the global financial meltdown, the Business Markets Group saw lower earnings in the third quarter than it might have liked. Revenue amounted to $1 billion, down 1 percent from the year-ago period. IP services stood out as the top seller, and legacy revenue – no surprise – brought in far less money, with sales slumping 9 percent.
Qwest did not break down the percentage of revenue the mid-markets sector contributes to the Business Markets Group overall.
Wietecha said the laid-off workers did receive severance packages.
These latest job cuts come as Qwest ends pension benefit accruals for active management employees. The service provider also will not hand out merit increases to managers next year. The changes go into effect Jan. 1.
“It is important for us to reduce costs, in part through the steps we are taking with the pension and management salaries, yet maintain competitive benefits and compensation for our employees,” Ed Mueller, chairman and CEO of Qwest, said in a prepared statement on Nov. 2. “By continuing to match employees’ contributions to our 401(k) plan, provide solid health benefits and not reduce salaries, we believe we are better positioned for future success.”
Qwest expects to save about $60 million by changing its pension-plan contributions. The salary freeze should save about $35 million in 2010. Plus, with changes to workers’ health plan and life insurance benefits, Qwest hopes to save a total of $100 million throughout all next year.
Shares of Qwest were trading 2.18 percent higher late Friday morning at $3.75.
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