Telco giant Vodafone to cut 11,000 staff as part of its turnaround plan
Company 'more complex' than it needs to be, thousands set to lose jobs
UK telecoms giant Vodafone aims to lay off 11,000 workers over three years as part of an action plan to improve operations and put the focus back on customers, following a period of relatively poor performance.
The blueprint was disclosed as part of Vodafone’s preliminary results for its fiscal year 2023, with newly appointed Group CEO Margherita Della Valle saying:
“Our performance has not been good enough. To consistently deliver, Vodafone must change.”
She claimed the comparative performance of Vodafone had worsened over time, and this was “directly connected to the experience of our customers." Della Valle added that Vodafone is currently more complex than it needs to be, which is affecting commercial agility in local markets.
The telco is proposing to excise 11,000 jobs over three years, at both UK HQ and in local markets, and said it has earmarked “significant investment” for FY24 towards customer experience and branding. The layoffs represent more than 10 percent of Vodafone’s global workforce, which was somewhere in the region of 100,000 people last year.
The company said it hopes to “maximize the potential” of Vodafone Business, which it regards as being well positioned to take advantage of growing demand for help from organizations with digital transformation projects.
Meanwhile, to win back consumers, Vodafone said it needs to “refocus on the basics” and deliver a “simple and predictable experience” that it believes customers expect. It also aims to focus resources on those products and geographies that it hopes will lead to better returns over time.
The preliminary results for FY 2023 ended March 31 are in line with expectations, and show revenue for the group up just 0.3 percent to €45.7 billion ($49.7 billion). This was driven by growth in Africa and higher equipment sales, the company said, but offset by lower European service revenue and adverse exchange rate movements.
However, Vodafone earnings declined 1.3 percent to €14.7 billion ($16 billion), which it blamed on higher energy costs and commercial underperformance in Germany.
The profit forecast for FY 2024 is "broadly flat" at around €13.3 billion ($14.4 billion), based on some rejigging of figures to reflect the current structure of the Group and expected foreign exchange rates.
Shares in Vodafone were down 7.4 percent to 83.33 pence in London trading following the release of the results.
“This is a start of a long and painful journey for Vodafone,” PP Foresight media and telco analyst Paolo Pescatore told us. He said it is, however, encouraging to see the company aiming to focus on generating more revenue and not just on cost cutting and driving more efficiencies.
“Behind the scenes Etisalat has been steadily increasing its stake which shows a strong endorsement in Della Valle and confidence in the future strategy,” Pescatore said.
Etisalat, now officially known by the bizarre name of e&, is the largest telco in the United Arab Emirates (UAE), and increased its stake in Vodafone Group to 14 per cent earlier this year, making it the largest shareholder in the company.
- Spain gets EU cash to test next gen network, and US 'scrum for 6G' already under way
- Sony Semiconductor sinks Simoleans into Raspberry Pi to advance edge AI
- Parts of UK booted offline as Virgin Media suffers massive broadband outage
- Not satisfied with Virgin Media and O2 merger, Liberty Global takes 5% Vodafone stake
Liberty Global, the US-based parent company of Virgin Media O2, snapped up its own 5 percent stake in Vodafone earlier this year.
“Change needs to happen and she [Della Valle] is moving quickly. Unfortunately, it will take time and require significant resources in articulating the new Vodafone to all users,” Pescatore added.
Della Valle, formerly Chief Financial Officer, was only appointed Vodafone Group Chief Executive at the end of April following the departure of her predecessor Nick Read in December. Read reportedly left due to pressure from shareholders unhappy at the company’s poor performance in Germany, its largest market.
Despite this, the pending merger between Vodafone’s UK operations and Three UK, owned by CK Hutchison Holding Ltd, is still said to be going ahead, with investor site Barron’s claiming that a deal worth £15 billion ($18.7 billion) is close to being finalized.
Talks between the two parent companies were said to be at an advanced stage last October, with a deal at that point expected by the end of 2022, although approval by shareholders and regulators would still have had to be sought.
However, Vodafone cautioned in the latest earnings release: “there can be no certainty that any transaction will ultimately be agreed.” ®