Vodafone, the renowned British telecom giant, is set to undertake a significant workforce reduction as part of its efforts to simplify its organization and reduce costs. Margherita Della Valle, the newly appointed CEO of Vodafone, revealed the company’s plan to eliminate 11,000 positions worldwide over the next three years. This decision comes in the wake of Vodafone’s dwindling share price, which recently hit a two-decade low. The telecom company aims to restructure its operations to bolster its competitive edge and provide an improved customer experience. The massive layoffs are a vital component of Vodafone’s broader cost-saving strategy, amounting to €1 billion ($870 million), which was initially announced in November. Margherita Della Valle, who formerly served as Vodafone’s finance chief, outlined her vision for a leaner and more streamlined organization, emphasizing heightened commercial agility and resource allocation. Della Valle expressed her intentions, stating, “Today, I am announcing my plans for Vodafone. Our performance has not been satisfactory. To consistently deliver, Vodafone must undergo transformation. “The CEO’s key priorities encompass customers, simplicity, and growth. Della Valle emphasized the need to simplify the company’s structure, eliminating complexity to regain competitiveness. Furthermore, Vodafone aims to reallocate resources to meet customers’ expectations for a high-quality service while driving growth from the unique position of Vodafone Business. Della Valle stressed the company’s commitment to steering Vodafone toward a more sustainable future, and the layoffs represent a significant step in the plans to streamline the organization and reduce costs, given the projections of minimal or no earnings growth in the upcoming financial year. The staff reduction marks the most substantial job cuts in the company’s history, impacting approximately 11,000 employees.
Vodafone’s decision to downsize its workforce stems from underwhelming financial performance, with group core earnings declining to €14.7 billion ($16.9 billion) for the year ending in March. The company has faced stiff competition from rivals such as AT&T and Verizon in the United States, as well as China Mobile and China Unicom in China. Rising costs and a slowdown in customer growth have further contributed to Vodafone’s challenges. In a bid to salvage its position, Vodafone intends to streamline its operations and enhance its financial standing by refocusing on core principles and delivering a simple and predictable customer experience.
The company’s action plan revolves around three primary objectives: significant investments in customer experience and brand, a three-year plan to reduce 11,000 roles, and a Germany turnaround strategy, alongside continued pricing adjustments and a strategic review in Spain. Earlier in November 2022, Vodafone unveiled a cost-cutting plan, including job cuts, to address mounting energy expenses and inflation after revising its annual profit forecast. The plan, valued at over €1 billion ($1.15 billion), set the stage for Nick Read’s departure as CEO the following month, following a 40% decline in market value during his four-year tenure. Vodafone had also been in talks to merge its UK operations with rival Three UK, owned by CK Hutchison, with a reported deal nearing completion at €15 billion ($18.7 billion).