January 9, 2016 / 4:05 PM / 2 years ago

Numericable-SFR seeks new CEO to stem customer loss

PARIS, Jan 9 (Reuters) - France's Numericable-SFR is looking for a new chief executive to stem the loss of customers and improve relations with suppliers, staff and public authorities.

Nearly a year after cable operator Numericable's takeover of mobile phone group SFR and four months after the appointment of Numericable-SFR chairman Michel Combes, the company said on Thursday that Eric Denoyer would give up his CEO position.

A longtime business associate of Numericable-SFR owner Patrick Drahi, Denoyer will keep a seat on the board.

The new CEO, expected to be announced soon, will have to develop a strategy for winning new customers after a year of aggressive cost cutting and restructuring at the group.

Deutsche Bank estimates Numericable-SFR, which has network quality problems, has lost some 1.3 million mobile clients last year while its competitors have gained market share.

"SFR is now in the stage of commercial reconquest, it is logical that it needs a new driving force," said a source familiar with the situation.

Combes told Les Echos this week that the operator, which has launched several promotional offers in recent months, has seen positive net sales in the fourth quarter of last year.

Over the same period, SFR also sped up the rollout of its 4G network, boosting its number of antennas to 4,587 from 3,431.

"Drahi's strategy works: you buy a company with lots of debt and then you cut costs to boost the margin, but this should not be at the expense of revenue," said Gilles Guibout of Axa Investment Managers.

Last year, Numericable-SFR shares lost 3.52 percent while its competitors Orange, Iliad and Bouygues gained 9.4, 10.7 and 21.9 percent.

Shares of Numericable-SFR's parent company Altice slipped 16.5 percent as investors worried about a mountain of debt used to finance a string of acquisitions.

CFDT union delegate Xavier Coutillat said the planned management changes will strengthen the hand of Michel Combes, who came from network equipment manufacturer Alcatel-Lucent after having worked for telco operators Vodafone and France Telecom.

Combes has also appointed a new human resources director, Florence Cauvet, as unions warned of rising social tensions in the firm.

"There was a need for a totally new cast in order to rebuild dialogue between all parties. It was time for pacification," Coutillat said.

Numericable-SFR will also rely on former state holding company APE chief Regis Turrini - hired by Altice last week - to smooth relations with French public authorities, annoyed by the firm's harsh treatment of its suppliers and subcontractors.

It was fined 750,000 euros last year because of late payments. (Writing by Geert De Clercq; Editing by Tom Heneghan)

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