Vodafone announces a significant reduction in workforce as part of a turnaround plan aimed at reviving its fortunes after years of poor performance
May 16, 2023
Vodafone, the global telecommunications company, has unveiled a turnaround plan aimed at reviving its fortunes after years of poor performance. As part of this plan, the company has announced a significant reduction in its workforce, with 11,000 jobs set to be cut over the course of three years. In this article, we delve into the details of the announcement and explore the factors leading to this decision.
Vodafone revealed that the job cuts will primarily affect its UK headquarters and operations in other countries. This move has been met with concern, as it resulted in a 4% slide in the company's shares in London. With a workforce of 104,000 employees worldwide, Vodafone's decision to streamline its organization highlights its determination to simplify processes and regain competitiveness in the market.
In the past, Vodafone was the world's largest mobile telecom group, but it has faced challenges in recent years, struggling to retain market share. The company operates in 21 countries and has partnership agreements with local operators in an additional 46 locations. However, European telecoms companies, in general, have delivered lower returns to shareholders compared to their counterparts in the United States. Vodafone's performance relative to its peers has deteriorated over time, resulting in a decline of 28% in its shares over the past year.
Margherita Della Valle, Vodafone's CEO, expressed her commitment to prioritize customers, simplicity, and growth. Under the turnaround plan, the company aims to invest more in improving customer experience and allocate additional resources to Vodafone Business, which caters to corporate clients. The strategic overhaul seeks to address the declining revenue growth and adjusted earnings experienced by Vodafone. Weak performance in Germany, its largest market, along with high energy prices, contributed to these challenges.
Vodafone's financial results for the year ending in March showed a meager revenue growth of 0.3% to €45.7 billion ($49.8 billion). Adjusted earnings declined to €14.7 billion ($16 billion), falling short of the company's own guidance. As a result, Vodafone expects its free cash flow for this financial year to be approximately €3.3 billion ($3.6 billion), a decrease from €4.8 billion ($5.2 billion) recorded in the previous year.
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