KEY POINTS
- Vodafone’s performance compared to its peers has “worsened over time,” CEO said
- The company saw its shares going down 4%
- Vodafone will redirect more resources toward customer experience
British telecommunications firm Vodafone has announced plans to cut a record of 11,000 jobs over three years, in view of declining performance.
“Our performance has not been good enough. To consistently deliver, Vodafone must change,” recently-appointed CEO Margherita Della Valle said in a statement Tuesday. “My priorities are customers, simplicity and growth. We will simplify our organization, cutting out complexity to regain our competitiveness.”
Amounting to about 11% of its total global workforce of just over 100,000, this will be the largest round of job cuts made in the history of the company. It has a staff of 12,000 employees in Britain, divided among seven offices, including its U.K. headquarters in Berkshire.
It is yet not clear which all departments would be impacted and how many roles would be affected in the U.K. as part of the layoffs.
Valle revealed Vodafone’s performance compared to its peers has “worsened over time,” and the company saw its shares going down 4%, CNN reported.
“Our performance relative to our major competitors in our largest markets has not been good enough, and we know that this is strongly connected to the experience of our customers not being good enough,” she added.
The mobile operator giant reported $49.7 billion in revenues for the fiscal year ending March 31, almost similar compared to the previous year. Its shares have also fallen 28% over the past year.
Vodafone has been facing pressure in progressing markets like Germany and Spain amid increasing competition from rivals and higher energy costs, according to CNBC. Investors have condemned the company’s slow progress and not ensuring necessary measures to improve the business. The pressure intensified after the telecom service faced embarrassment in April, when around 11,000 of its U.K. faced massive outages of broadband services.
As part of its turnaround plan, the company will redirect more resources toward customer experience and Vodafone Business.
“We will reallocate resources to deliver the quality service our customers expect and drive further growth from the unique position of Vodafone Business,” the CEO added.
The Newbury, England-based telecom provider is going through a transition after former CEO Nick Read stepped down in December amid concerns over the company’s performance. Vodafone witnessed a 40% slump in market value during his four-year tenure as chief executive.
This also comes months after the company cut its annual profit forecast and revealed a $1.08 billion cost-cutting plan that included job cuts to counter inflation and surging energy bills.
“We are taking a number of steps to mitigate the economic backdrop of high energy costs and rising inflation. These include taking pricing action across Europe, whilst at the same time supporting our most vulnerable customers and driving energy efficiency measures across the business,” former chief executive Nick Read had said at the time.
One of the world’s biggest mobile telecom groups once, Vodafone bought Germany’s Mannesmann in 2000 with a deal valued at over $190 billion in the largest takeover in history. However, the company has been struggling to retain market share in recent years.
Apart from the U.K., Vodafone has businesses in 21 countries and partnership agreements with local operators in another 46 locations. It is a leading mobile network provider in Germany, Spain, Italy and parts of Africa.
Meanwhile, Vodafone is in the closing stages of talks with CK Hutchinson, owner of rival telecommunications enterprise Three UK, for a merger worth about $18.7 billion. “There can be no certainty that any transaction will ultimately be agreed,” Vodafone said.
The partnership, which will create the U.K.’s biggest mobile company to compete with rivals, will see a planned ownership split of 51% for Vodafone and 49% for Hutchison, Hong Kong’s telecoms-to-ports conglomerate.
Earlier in February, Swedish telecom company Ericsson, one of the world’s biggest providers of 5G mobile networks, had also announced 8,500 job cuts in the aftermath of rising costs.
