2023-05-16 11:16:14
Vodafone goes into shock treatment. In the midst of shareholder turmoil and in the midst of a hectic series of asset sales, the British telecom operator announced on Tuesday its intention to cut 11,000 jobs over three years. That is 12% of the group’s workforce present in Europe and Africa and the largest social plan in its history.
Appointed general manager following a few months of interim in this position, the Italian Margherita Della Valle wants to settle the legacy of the four years of mandate of her predecessor, Nick Read, marked by poor performance. According to her, the group “must change”. The job cuts will concern the head office in London and the subsidiaries abroad, particularly in Germany. “We need to speed up the execution,” she said during a videoconference with journalists.
Stagnation of receipts, fall in Germany
The annual results for the year ended last March once once more exposed the group’s weaknesses. “Our performance was not good enough”, might only see the boss. In Germany, the group’s largest market, the flight of many customers confused by computer problems is impacting revenue (-2.8% in the last quarter). In Spain and Italy, Vodafone struggles with competition and price pressure. Even if the activity in Africa is on the other hand in good shape, Margherita Della Valle expects a drop of 1.5 billion euros in its cash flow over the current year.
-2,8 %
This is the decline in revenues from Vodafone in Germany, following already declines of 1.8% and 1.1% respectively in the third and second quarters of the last financial year.
In total, Vodafone reported stagnant revenue at 45.7 billion euros. If the operating profit increased to 14.3 billion euros over the period once morest only 2.8 billion during the previous financial year, it is mainly thanks to the 12.3 billion euros generated with its withdrawal from Vantage Towers , floated on the Frankfurt Stock Exchange.
Strategic review in Spain
With this job cuts project, Vodafone hopes to regain competitiveness. “The measures we had taken previously were probably too incremental, we must go further,” insisted the boss, referring to the previous social plans launched by the group. Nearly 1,000 jobs had already been cut in Italy at the start of the year.
The downsizing is also accompanied by the launch of a strategic review in Spain. On this market, Vodafone sees its rivals overtake it and in particular the French Orange, on the point of merging with Masmovil subject to Brussels authorisation. According to the Spanish newspaper El Economista, the fixed network of Vodafone in Spain interested the investment funds Macquarie and Ardian last February. To obtain them, the duo was ready to pay 4 billion euros.
On the side of the United Kingdom, the group refused to comment on the press reports which reported at the beginning of May of an imminent merger at 15 billion pounds of Vodafone with the operator Three (CK Hutchison) in mobile telephony.
Investor Battle
Vodafone, a heavyweight in the sector in Europe, has been carrying out a restructuring for several years which has notably led it to refocus on Europe and Africa. “But they made mistakes, first by remaining a sort of holding company when things were going well and not an integrated international group, then by refusing when the tide turned to sell assets that were too undervalued for management’s taste”, analyzes a good connoisseur of the sector. Vodafone had notably refused to sell its Italian activities for 11 billion euros to Iliad, the group of Xavier Niel.
In this slump which caused the stock price to halve in five years, Vodafone had attracted many investors wishing to influence its strategy, in particular the French billionaire (2.5%) or the Liberty Global group (5% ). But Vodafone and Emirates Telecommunications (e&), which became the largest shareholder in the British telephony group a year ago, announced a “strategic partnership” agreement last week. With 14.6% of the capital, the Emirati group has thus officially become “Vodafone’s reference shareholder”.
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