TORONTO: Canadian telecomnunications equipment maker Nortel Networks Corp. is cutting some 1,100 jobs and restructuring its pension plans as part of a strategy to trim costs and improve operating margins, the company said Tuesday.

The company intends to improve its margins by more than $1.5 billion in 2008. The job cuts are part of a reorganization of operations that will lead to a $35 million charge in the second quarter. It is expected to cost around $100 million over the next two years, the company said in a statement.

Nortel, which incurred losses to the tune of $2.58 billion in 2005, will eliminate 1,900 positions worldwide and create 800 new ones in its “centers of excellence” located in Mexico and Turkey. It did not specify where the job cuts will be made. The cuts will, however, include 350 middle management positions.

The changes are expected to bring in savings of about $100 million in 2007 and $175 million by 2008.

Nortel had undertaken staff trimmings in the past and its headcount now stands at 35,000 against a high of 90,000 six years ago.

The company also intends to cut down annual costs on its pension plans by about $100 million from 2008 and save more than $400 million by 2012. It intends to switch over to a defined contribution plan in North America and also change healthcare rules.

It had defined benefit plan obligations of $8.95-billion in 2005, though the unfunded status of the program was $2.496-billion.

Nortel’s president and chief executive Mike Zafirovski said the plans are part of the management’s efforts to increase competitiveness, better manage costs, and secure the resources to fuel innovation.

The company had restated its results three times over the past three years after a string of accounting scandals. It has been largely left untouched by the wave of consolidation happening in the telecom industry, including the Alcatel-Lucent Technologies and Nokia-Siemens deals.