Vodafone CEO Margherita Della Valle announced a strategic plan to streamline the company and enhance its competitiveness, stating that they would eliminate 11,000 jobs over a three-year period.
This move, aimed at simplifying the organization, comes as Vodafone anticipates a decline of €1.5 billion in free cash flow for the current year.
These job cuts mark the largest workforce reduction in Vodafone’s history. The telecommunications giant, known for its prominent presence in Europe and Africa, employs approximately 100,000 individuals.
Della Valle, who officially assumed the role of CEO last month, expressed dissatisfaction with their performance, emphasizing the significance of prioritizing customers, simplicity, and growth in their future endeavors.
Matt Britzman, an equity analyst at Hargreaves Lansdown, highlighted Vodafone’s lackluster performance, which has become an expected pattern in recent times. The company’s annual results remained in line with this trend.
The CEO identified Germany, Vodafone’s largest market, as underperforming, while Spain, which has experienced intense competition in recent years, is currently undergoing strategic evaluation.
Further exacerbating the challenges faced by Vodafone, the company announced an expected cash generation of €3.3 billion ($3.6 billion) for the current financial year, a decrease from the previous year’s figure of €4.8 billion, due to pressures in Germany and increased energy costs.
Vodafone stated that the European telecommunications market has historically delivered unsatisfactory returns on invested capital, and its own relative performance within the industry has deteriorated over time.
Critics, including activist investors and competitors, have often criticized Vodafone for being slow to adapt to market changes and having a cumbersome structure.
Della Valle outlined her plans to optimize business customer potential, a longstanding strength of Vodafone, while also prioritizing fundamental aspects such as customer service within the consumer market.
Job cuts have already been initiated in Vodafone’s key markets, with 1,000 positions eliminated in Italy earlier this year, and reports suggesting a further reduction of approximately 1,300 jobs in Germany.
Della Valle’s predecessor, Nick Read, who departed in December, had stressed the need for consolidation in major markets like Britain. Vodafone has been engaged in discussions with Hutchison’s Three UK for the past nine months, although the company did not provide any additional comments or certainty regarding these negotiations.