Vodafone has announced plans to cut 11,000 jobs as part of a turnaround from the company’s newly appointed CEO Margherita Della Valle.
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Vodafone shares fell as much as 4% on Tuesday, after the British telecommunications company announced plans to cut record jobs and forecast a drop in free cash flow.
“Our performance hasn’t been good enough. To provide continuity, Vodafone has to change,” newly appointed CEO Margherita Della Valle said in a candid statement Tuesday.
Vodafone said it will cut 11,000 jobs over three years, out of a total of more than 100,000 employees. It was the largest cutback made in the company’s history, Reuters reported.
“My priorities are customers, simplicity and growth. We will simplify our organization, remove complexity to regain competitiveness. We will reallocate resources to deliver the quality service that customers expect and drive further growth from Vodafone Business’s unique position,” said Della Valle.
Vodafone reported revenue of 45.7 billion euros ($49.7 billion) for the financial year ending March 31, 2023, almost unchanged from the previous year.
But it gave a pessimistic guidance for the financial year ending March 2024, saying free cash flow would fall to 3.3 billion euros, from 4.8 billion euros the year before. Free cash flow is a measure of how much cash a company has left after paying its operating and other expenses.
Vodafone is facing pressure in key markets such as Germany and Italy, amid stiff competition.
Investors have criticized the company for moving too slowly and not making the changes needed to turn the business around.
Vodafone has been going through a transition since before CEO Nick Read resigns at the end of last year. The company appointed Della Valle as its permanent CEO in April to transform the business.
“What will change is the level of ambition, speed, [and] decisiveness of execution,” Della Valle said in a video recorded on Tuesday.
Meanwhile, Vodafone is in talks with CK Hutchinson, owner of rival telecommunications business Three UK, to proceed with a merger. Vodafone said that “it is impossible to be certain that any transaction will eventually be agreed upon.”
