Vodafone, the British telecom giant, has announced that it will be reducing its global workforce by 11,000 employees over the next three years. The decision comes as the company’s share price hit a two-decade low and it seeks to restructure its business to improve its competitive edge and enhance customer experience.
The mass layoffs by Vodafone are part of the company’s broader cost savings plan of €1bn (ã870m) that was first announced in November. The new CEO, Margherita Della Valle, has described her vision for a leaner and simpler organisation, with increased commercial agility and resource allocation.
“Today I am announcing my plans for Vodafone,” said the former finance chief Della Valle of Vodafone, who was appointed as CEOlast month. “Our performance has not been good enough. To consistently deliver, Vodafone must change.”
“My priorities are customers, simplicity and growth. We will simplify our organisation, cutting out complexity to regain our competitiveness. We will reallocate resources to deliver the quality service our customers expect, and drive further growth from the unique position of Vodafone Business,” Valle further said in her statement.
The CEO stresses that the company is now planning to steer Vodafone towards a more sustainable future, and the layoffs are part of the plans to simplify the organisation and reduce costs in response to forecasts of little or no earnings growth for the new financial year. These plans involve the largest job cuts in the company’s history, affecting around 11,000 employees.
The reduction in staff was foreseen as Vodafone’s financial performance has been underwhelming, reporting a decline in group core earnings to 14.7 billion euros for the year to end-March. Vodafone has been struggling in recent years, facing competition from rivals such as AT&T and Verizon in the United States, and China Mobile and China Unicom in China. The company has also been hit by rising costs and a slowdown in customer growth.
Now to catch the drawing ship, Vodafone is planning to streamline its operations and improve its financial position by refocusing on the basics and delivering a simple and predictable experience to its customers. The company’s action plan is focused on three priorities: significant investment in customer experience and brand, 11,000 role reductions planned over three years, and a Germany turnaround plan, continued pricing action, and strategic review in Spain.
Earlier In November 2022, Vodafone announced a cost-cutting plan, including job cuts, to address rising energy bills and inflation after cutting its annual profit forecast. The plan is worth over €1 billion. In the following month of December, Nick Read stepped down as CEO after a 40 per cent slump in market value during his four-year tenure. Vodafone was in talks to merge its UK operations with rival Three UK, owned by CK Hutchison, with a deal reportedly close to completion at ã15 billion ($18.7 billion).
