Vodafone is to cut 11,000 jobs from its global workforce over the next three years, the largest round of cuts in the troubled telecoms group’s history.
The job losses amount to more than a tenth of the 104,000 global staff employed by Vodafone. The company employs about 9,000 people in the UK, including at its headquarters in Berkshire.
The cuts mark the first big move by Margherita Della Valle, appointed as Vodafone’s first female chief executive last month, who said that the company needed to be leaner and more efficient to compete against rivals.
“Our performance has not been good enough. To consistently deliver, Vodafone must change,” she said.
The job losses will fall across Vodafone’s entire operations – starting with its group functions, which are based in the UK, Germany, the company’s biggest and worst-performing market, and Italy – with no indication of the scale of cuts in each market.
Della Valle said Vodafone’s headquarters would become “as lean as possible”, and the restructuring plan includes a revision of staff incentive schemes throughout the business to be more closely matched with hitting performance targets.
The cuts will free up an extra €100m (£87m) to be ploughed in to marketing to revitalise the Vodafone brand, and €150m to improve the customer experience.
Della Valle said the savings from the job cuts would not increase a €1bn target announced in November.
The wider restructuring includes a review of options for Vodafone’s Spanish business, including a potential sale.
“Looking at our position in the industry and the steps we have taken in the last few years, we have probably been too incremental,” Della Valle said.
Vodafone, which has about 18 million UK mobile customers and more than 1 million broadband customers, is in the closing stages of pushing through a merger with Three to create the UK’s biggest mobile company.
Della Valle said she hoped a deal to reduce the number of big UK mobile operators from four to three – something that has in the past been blocked by regulators over competition issues – would be given the go-ahead.
“I would say that the mood music has changed,” she said. “There is a wide understanding that the problem of returns [on investment] is preventing Europe to develop 5G networks in line with the rest of the world. We don’t have enough scale.”
“My priorities are customers, simplicity and growth,” Della Valle added. “We will simplify our organisation, cutting out complexity to regain our competitiveness. We will reallocate resources to deliver the quality service our customers expect.”
Shares in Vodafone fell more than 9%, making it the biggest faller on the FTSE 100 on Tuesday, as investors reacted to the news and a forecast of a drop of €1.5bn in free cashflow this year.
“Lacklustre performance has been something markets have come to expect from Vodafone of late,” said Matt Britzman, an equity analyst at Hargreaves Lansdown. “The new chief executive has been very vocal about the host of challenges she’s facing in her new role. The honesty is refreshing but not enough to keep the shares falling. Markets will need to see tangible results over the coming year before they get more excited.”
In November, Vodafone cut its annual profit forecast and announced a €1bn-plus cost-cutting plan, including job cuts, to cope with soaring energy bills and inflation.
A month later, the company ousted the two-decade Vodafone veteran Nick Read after a 40% slump in market value during his four-year tenure as chief executive.