- Vodafone announces the massive layoff of 11,000 employees as part of a radical restructuring strategy, causing its shares to fall by more than 4%.
- CEO Margherita Della Valle confirms the layoffs and expresses concern about the projected decline in revenue.
- Vodafone aims to simplify its organisation, prioritize customer needs and allocate resources to drive growth as it explores a potential merger with Three UK.
Vodafone announced on Tuesday, May 16, massive layoffs involving 11,000 employees as part of a radical restructuring strategy for the British telephone operator.
It was confirmed by the new CEO, Margherita Della Valle.
In this framework, Vodafone shares collapsed more than 4 percent, publishes CNBC.
Beyond the layoffs, what worried investors the most is the forecast drop in revenues and in Vodafone’s so-called “free cash flow” for the remainder of 2023.
“Our performance is not good. In order to continue, we must change.” Della Valle said with a sincerity unusual for publicly traded companies, because comments like this can, as it did, hit stock values.
The layoffs announced by Vodafone involve 11,000 jobs in the next three years, starting now, out of a total workforce of more than 100,000 workers.
This is the largest redundancy plan in the history of the British company.
Della Valle said that “the priority is customers, simplicity and growth” and that they will remove “all complexities” from the organization with the idea of ”regaining competitiveness.”
In addition to the layoffs, the CEO spoke of “reallocating resources” to provide quality services and boost growth underpinned by “Vodafone Business”.
Vodafone reported 45.750 million euros (US$49.750 million) in billing in the fiscal year from March 2022 to March 2023. A flat result compared to the previous year.
Strategies
In recent years, traditional telephone operators have witnessed a drastic change in consumer behavior, as the demand for voice calls has decreased in favor of instant messaging applications, social networking platforms and mobile tools. of videoconference.
This change has required a reassessment of business models and a focus on adapting to changing consumer needs and preferences.
Vodafone has carried out an adaptation strategy that goes beyond improving its infrastructure, but it has not been enough.
It is that although it has adopted artificial intelligence and automation to improve customer service, simplifying processes and reducing response times, technology advances faster.
The use of chatbots and virtual assistants has improved, but it is far from optimal, which is why the CEO wants changes.
Vodafone explores a merger with its rival
As we anticipated before, Vodafone issued pessimistic forecasts for its fiscal year ending March 2024, warning that free cash flow will fall to 3,310 million euros, compared to 4,850 million the previous year.
Free cash flow is a data that shows how much cash a company has left after paying operating expenses and other expenses.
Vodafone’s biggest problem is not in the UK, but in other key markets for the company, such as Germany and Italy, where competition is fierce.
In parallel, Vodafone is in talks with CK-Hutchinson, owner of rival telecommunications business Three-UK, for a possible merger.
Now read:
Electric car manufacturer lays off 10% and delays its next model
Disney will combine its streaming on a single platform in this country
Nintendo Switch sales collapse and experts warn that “it’s old”
