Cellcom workers agree to 450 layoffs

Avi Gabbay and Maya Yaniv

The Israeli telecom company's employees taking voluntary retirement will receive generous severance pay and benefits.

Telco Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) board of directors convened today to approve a labor agreement with the company workers' committee, headed by Maya Yaniv. The agreement was reached after an improvement in the atmosphere and relations between the committee and incoming Cellcom CEO (and former Labor Party chairman) Avi Gabbay.

The agreement includes voluntary retirement for 450 employees, who will receive generous severance terms. The retiring employees with the most seniority will receive golden parachutes and additional benefits.

A leading feature of the agreement is NIS 42 million worth of options for Cellcom workers in three packets, depending on the company's performance. The agreement is a vast improvement on the preceding one, in which the options totaled NIS 15 million. It was also agreed that the workers would appoint one director in Cellcom.

Cellcom's management and board of directors hope that the new agreement will start the company on a new path to improved results. The company plan originally reported to the TASE was for 1,000 layoffs, not including outsourcing, subcontractors, etc.

The plan will reduce Cellcom's expenses by NIS 150 million a year, which it meant to restore its profitability next year. If prices in the mobile phone market continue falling, or remain at the current level, it will be very difficult for Cellcom and the other companies in the market to avoid losing money.

Cellcom raised NIS 300 million in order to meet the debt repayments to its bondholders next year, as part of its recovery plan. Carrying out the plan is at a very difficult stage, because it involves a relatively large number of workers and will affect all of the company's work processes. Gabbay's aim is to do this without detracting from customer service.

Published by Globes, Israel business news - en.globes.co.il - on February 6, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Avi Gabbay and Maya Yaniv
Avi Gabbay and Maya Yaniv
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