TELEFÓNICA IRELAND is seeking to cut more than 10 per cent of its 1,100-strong Irish workforce.

The company, which operates under the O2 brand, said it was reducing employee numbers by 120, but that the job cuts would be on a voluntary basis.

The decision was made after a review of the business, which found that there was a need to reduce costs and trim employee numbers. Telefónica said the “difficult decision” had been taken to deal with the ongoing challenging market conditions.

“In responding to these challenges, the company is making changes to processes and operations to drive greater efficiency while maintaining the service it delivers to customers.”

Competition in the telecoms market has also intensified, with O2 Ireland noting that average revenue per user shrank in the final quarter of 2011 to €31.33, from €32.46 in the previous quarter, as customers sought to get more value from their mobile plans.

Rising smartphone sales, however, have contributed to significant increase in mobile internet traffic on the O2 network.

Employees must now be consulted on the plans. Those working in the retail stores and customer care – about 450 people – are precluded from applying.

“The redundancy terms will be in line with previous terms given to people – six weeks’ pay per year of service,” a spokesman for O2 said. “In addition, statutory redundancy (for those people with more than two years service) will be two weeks’ pay per year of service.”

The latest blow to the labour market comes just weeks after Vodafone Ireland said it was moving its mobile call centre operation, based at two centres in Dublin and Dundalk, from Irish firm Rigney Dolphin to Newry-based Teleperformance. Some 26 Vodafone jobs and 290 contract roles currently with Rigney Dolphin would transfer to Teleperformance under the move.

Although the network said no jobs would be lost as a result of the move, staff said they had been told they would have to move to Newry or Dublin.