Troubled Vodafone to axe 11,000 jobs

As new chief says performance ‘is not good enough’ . . .

VODAFONE shares crashed to their lowest level in more than two decades as its new chief executive’s blueprint to turn the company around fell flat.

Margherita Della Valle unveiled plans to slash 11,000 jobs over the next three years after warning that the telecoms giant ‘must change’ in order to end a period of poor performance and revive its flagging stock price.

The cuts, equivalent to over 10pc of the FTSE 100 firm’s 90,000 global workforce, will be focused on Vodafone’s UK headquarters as well as its local markets.

It came as Della Valle, who became permanent chief executive of the group last month, said the firm’s performance ‘has not been good enough’ and previous steps to improve the business were ‘too incremental’.

‘We need to be much deeper and faster today in our execution,’ she said.

‘We will simplify our organisation, cutting out complexity to regain our competitiveness.’

But the strategy received a frosty reception from investors and the shares fell as much as 10pc to around 81p, their lowest level since 2002 following the bursting of the dot com tech bubble. They later closed down 3.1pc, or 2.76p, to 87.27p.

Analysts warned of ‘glaring flaws’ in Della Valle’s plan and said ‘ the share price fall shows the group isn’t fooling anyone’.

Della Valle served as Vodafone’s chief financial officer before taking over as chief executive on an interim basis following the exit of Nick Read at the end of last year as shareholders pressured the group to improve performance, particularly in its core German market. Before his ousting, Read unveiled plans last year to drive around £883m of cost savings.

The firm said at the time it could lead to job losses but did not put a figure on the number of roles being cut.

Aside from slashing its workforce, Della Valle said Vodafone will launch a strategic review of its Spanish business.

Merger talks between the telecoms operator and Three UK owner CK Hutchison were also ‘progressing’, she said, adding a deal would ‘take as long as it takes’ but a tie-up between the network and its UK arm would be ‘good for customers and good for the country’.

Plans for a radical overhaul came as Vodafone posted a disappointing set of annual results that saw earnings fall 1.3pc to £12.7bn for the year to the end of March, below the company’s guidance of more than £13bn.

Revenues edged up 0.3pc to £39.7bn but were lower than analysts had predicted.

The company’s cash flow forecast for the coming year also alarmed observers, with Vodafone predicting around £2.9bn in its 2024 financial year, a sum not much higher than its £2.2bn dividend for 2023.

Karen Egan, senior telecoms analyst at research house Enders Analysis, said the cashflow guidance was ‘disappointing’ in light of the dividend bill as well as other costs related to restructuring.