On Tuesday, Vodafone shares experienced a decline of up to 4% following the announcement made by the British telecommunications company. The company revealed its intention to cut an unprecedented number of jobs and projected stagnant profit growth.
Vodafone’s shares experienced a decline of up to 4% on Tuesday following the company’s announcement of significant job cuts and a projected stagnant profit growth. In a transparent statement, newly appointed CEO Margherita Della Valle acknowledged the need for change, stating, “Our performance has not been satisfactory. To consistently deliver, Vodafone must undergo a transformation.”
Over the course of three years, Vodafone plans to eliminate 11,000 positions, which accounts for a substantial portion of their workforce of slightly over 100,000 employees. This reduction represents the largest downsizing initiative in the company’s history, as reported by Reuters.
Della Valle emphasized her focus on customers, simplicity, and growth, stating, “My priorities lie in providing exemplary service to our customers, simplifying our operations, and driving growth from Vodafone Business’s unique position. By eliminating complexity and enhancing resource allocation, we aim to regain our competitive edge.”
Vodafone, a telecommunications company, has reported revenues of 45.7 billion euros ($49.7 billion) for its fiscal year ending on March 31, 2023, showing little change compared to the previous year. However, the company has issued a pessimistic outlook for the fiscal year ending on March 31, 2024, projecting a decline in free cash flow from 4.8 billion euros to 3.3 billion euros. Free cash flow is a measure of the remaining cash a company has after covering operational expenses and other expenditures.
Vodafone is currently facing challenges in key markets like Germany and Italy due to intense competition. Investors have expressed dissatisfaction with the company’s slow pace and perceived lack of necessary changes to improve its performance.
Since the departure of former CEO Nick Read at the end of the previous year, Vodafone has been undergoing a transition period. In April, the company appointed Della Valle as the permanent CEO with the goal of transforming the business. In a recorded video, Della Valle expressed a commitment to increasing the company’s level of ambition, speed, and decisiveness in executing strategic initiatives.
Vodafone and CK Hutchinson, the owner of Three UK, have engaged in ongoing discussions regarding a potential merger. However, Vodafone has stated that the outcome of these talks is uncertain, and there is no guarantee that a transaction will ultimately be reached.