Vodafone’s new boss to cut 11,000 jobs

New Vodafone boss Margherita Della Valle said yesterday she would cut 11,000 jobs over three years to simplify the telecom group and regain its competitive edge as it forecast a €1.5bn (R31bn) drop in free cash flow this year.

The job cuts will be the biggest in Vodafone’s history.

The company employs about 100,000 people across Europe and Africa, making it one of the UK’s best-known corporate brands.

“Our performance has not been good enough,” Della Valle, who was appointed permanently as chief executive last month, said.

“My priorities are customers, simplicity and growth.”

Vodafone opened 4.5% lower, the biggest faller in the FTSE 100 and dropping to its lowest level since early January.

“Lacklustre performance has been something markets have come to expect from Vodafone of late, and full-year results didn’t buck the trend,” Hargreaves Lansdown equity analyst Matt Britzman said.

Della Valle said Germany, Vodafone’s biggest market, was underperforming, while Spain, which has suffered cut-throat competition in recent years, was under strategic review.

Underscoring the pressures on the business, Vodafone said it would generate €3.3bn (R68bn) of cash this financial year, down from €4.8bn (R100bn) in the year to end-March 2023. Analysts had expected €3.6bn (R74.8bn).

For the year to end-March, pressures in Germany and higher energy costs resulted in a 1.3% decline in Vodafone’s group core earnings to €14.7bn (R305bn), missing its own guidance.

Vodafone said the European telecom market had long delivered a poor return on the capital invested in networks, and its relative performance had worsened over time.

Activist investors and rivals have also described the UK group as unwieldy and slow to respond to market changes.

Della Valle said she would maximise the potential of business customers, a long-standing Vodafone strength, while focusing on the basics, such as customer service, in the consumer market.

Vodafone has already started to cut jobs in its big markets, shedding 1,000 in Italy earlier this year, while a media report said it was looking to cut about 1,300 in Germany.

Della Valle’s predecessor, Nick Read, who stepped down in December, had said consolidation was needed in major markets like Britain, where Vodafone has been in talks with rival Hutchison’s Three UK for at least nine months.

But yesterday, Vodafone said there could be no certainty that any transaction would ultimately be agreed upon.

It did not comment further on the talks. —