Orange to cut 2,000 UK staff as part of Wanadoo merger

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Up to 2,000 Orange employees in the UK will lose their jobs over the next four months after the mobile telecoms business merged with sister company Wanadoo, the internet service provider.

The two France Telecom subsidiaries employ about 13,000 people in UK, predominantly in the North-east and South-west of England. The big employment hubs include Darlington, with 2,500 staff, Bristol, where 2,400 people are employed, North Tyneside, with 1,800 employees, and Peterlee, with 1,000 staff.

Orange has yet to detail which parts of the business or which areas of the UK are most likely to be hit by the cull, but it is expected to involve between 1,800 and 2,000 job losses. A final structure will be put in place by September. Orange aims to cut 15 per cent of the staff costs of the enlarged company and a spokesman said the group will pursue other cost-savings related to overlapping businesses as well as network efficiencies.

The Communication Workers Union said the statement was "unduly worrying as we've received a very confused message from Orange which doesn't yet know where they will make these cuts".

The UK job cuts are part of the 17,000 that France Telecom announced in February. The cuts will be made by 2008, with 16,000 to be lost in France. Given the net staff reduction outside France will constitute 1,000 job cuts, the UK cuts imply that between 800 and 1,000 staff will be added to Orange's operations outside its core French and UK operations.

Wanadoo is being merged and rebranded under the Orange banner as France Telecom looks to confront the threat posed by competitors looking to sell mobile telecoms services in the same package as fixed-line and broadband internet products. NTL bought mobile service provider Virgin Mobile earlier this year to offer "quadruple play" products, including cable television. Carphone Warehouse is offering free broadband to users that subscribe to its fixed-line voice services, while Sky is also investing in the UK broadband market to offer bundled services.

An Orange spokesman said: "It is particularly important that we can compete with integrated product offers. It will be a lot easier to do so with mobile and broadband under one brand."

It is yet to be seen whether consumers will want to source all their personal communications needs from one provider but the threat is ominous enough to force mobile-only companies to consider ways to augment their product offers.