Vodafone announced plans to cut 11,000 jobs as part of a turnaround plan from the company’s newly-appointed CEO Margherita Della Valle.
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Vodafone shares fell more than 7% on Tuesday, after the British telecommunications firm announced plans to slash a record number of jobs and forecast a drop in free cash flow.
“Our performance has not been good enough. To consistently deliver, Vodafone must change,” recently appointed CEO Margherita Della Valle said in a candid statement on Tuesday.
Vodafone said it would cut 11,000 jobs over three years, out of a total headcount of just over 100,000. That is the largest round of reductions made in the company’s history, Reuters reported.
“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,” Della Valle said.
Vodafone reported 45.7 billion euros ($49.7 billion) in revenues for its fiscal year ended March 31, 2023, roughly unchanged versus the previous year.
But it issued a pessimistic guidance for the fiscal year ending March 2024, saying free cash flow would fall to 3.3 billion euros, versus 4.8 billion euros the year before. Free cash flow is a measure of how much cash a company has left after paying operating expenses and other expenditures.
Vodafone shares were down 7% on the gloomy outlook.
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 necessary to turn the business around.
Vodafone has been going through a transition period since its former CEO Nick Read stepped down at the end of last year. The company appointed Della Valle as permanent CEO in April to transform the business.
“What is going to change is the level of ambition, speed, [and] decisiveness of execution,” Della Valle said in a recorded video on Tuesday.
Meanwhile, Vodafone has been in ongoing talks with CK Hutchinson, owner of rival telecommunications business Three UK, to carry out a merger. Vodafone said that “there can be no certainty that any transaction will ultimately be agreed.”