Vodafone to slash 11,000 jobs in new CEO's turnaround plan
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Vodafone Group's new Chief Executive Officer Margherita Della Valle unveiled a plan to revive growth at the telecom giant, pledging to slash jobs and simplify the company’s corporate structure.
Vodafone will cut about 11,000 roles across the roughly 104,000 people it employs over the next three years, work to turn around its German business, and start a “strategic review” of its Spanish unit, the Newbury, England-based company said in a statement.
Vodafone employs up to 1,200 people in Ireland. However, their operations here are not expected to be impacted significantly.
Della Valle, a 29-year Vodafone veteran who previously served as chief financial officer and interim CEO before she was made permanent in the top role last month, is charged with turning around the company, which has suffered from a lagging share price and difficulty consolidating its sprawling global operations. In the statement, she said she would reallocate resources to focus on the “quality service our customers expect” and grow the Vodafone Business unit.
“Our performance has not been good enough. To consistently deliver, Vodafone must change,” she said in the statement. “My priorities are customers, simplicity and growth. We will simplify our organization, cutting out complexity to regain our competitiveness.”
Shares fell 4% to 86.43 pence in early trading in London this morning, with analysts at Morgan Stanley and Barclays Plc citing lower-than-expected profits in core European markets and the firm’s tepid outlook as negatives. The stock has gained 2.8% this year.
Adjusted free cash flow, a closely watched metric, will drop by about 31% to €3.3bn in the fiscal year ending in March, following divestments but also taking a hit due to “expected working capital movements,” the company said. Much of the decline is due to a change in German law which affects how Vodafone is able to collect money from customers, a spokesman said. A company-compiled consensus of analyst estimates had put the figure at €3.6bn.
Earnings before interest, taxes, depreciation and amortization after leases are expected to be €13.3bn in the year ending in March, which Vodafone described as “broadly flat” once factoring in the partial sale of mobile mast unit Vantage Towers and divestment of its business in Hungary.
Vodafone’s new CEO must also grapple with a suite of new shareholders from the telecom industry, some of whom are becoming more vocal about their desire to influence the direction of the company. Emirates Telecommunications Group, has been steadily building a stake and is now the company’s largest shareholder. The United Arab Emirates-backed company’s CEO Hatem Dowidar, a former Vodafone executive, will join the board as a non-executive director, Vodafone said last week.
Bloomberg