Vivendi's SFR telecom unit plans to cut 856 jobs via a voluntary departure plan, it said on Wednesday, as it restructures to cope with tougher competition.

SFR said it would meet with union representatives on Monday to negotiate terms. In effect, SFR will cut 1,123 jobs and create another 267 such as on-line sales staff and web community managers.

SFR is in the process of revamping its fixed and mobile offers and streamlining its organization in an effort to adjust to lower prices now taking hold in the French telecom market after the arrival of Iliad's Free Mobile in January.

The newcomer had taken 6.4 percent of the mobile market by the end of the third quarter.

Shares in Vivendi were 0.9 percent lower at 16.18 euros by 0942 GMT, compared with a 0.4 percent weaker French blue-chip CAC 40 index. The stock is little changed since the start of the year.

(Reporting by Leila Abboud; Editing by James Regan)