Vodafone shares drop 4% after record 11,000 jobs cut as CEO says telco ‘must change’

Vodafone shares fell as a lot as 4% on Tuesday, after the British telecommunications agency introduced plans to slash a file variety of jobs and forecast a drop in free money movement.

“Our performance has not been good enough. To consistently deliver, Vodafone must change,” not too long ago appointed CEO Margherita Della Valle stated in a candid assertion on Tuesday.

Vodafone stated it will reduce 11,000 jobs over three years, out of a complete headcount of simply over 100,000. That is the biggest spherical of reductions made within the firm’s historical past, Reuters reported.

“My priorities are customers, simplicity and growth. We will simplify our organisation, cutting out complexity to regain our competitiveness. We will reallocate resources to deliver the quality service our customers expect and drive further growth from the unique position of Vodafone Business,” Della Valle stated.

Vodafone reported 45.7 billion euros ($49.7 billion) in revenues for its fiscal 12 months ended March 31, 2023, roughly unchanged versus the earlier 12 months.

But it issued a pessimistic steerage for the fiscal 12 months ending March 2024, saying free money movement would fall to three.3 billion euros, versus 4.8 billion euros the 12 months earlier than. Free money movement is a measure of how a lot money an organization has left after paying working bills and different expenditures.

Vodafone shares have been down 4% on the gloomy outlook.

Vodafone is going through stress in key markets reminiscent of Germany and Italy, amid stiff competitors.

Investors have criticized the corporate for shifting too slowly and never making the modifications essential to show the business round.

Vodafone has been going by means of a transition interval since its former CEO Nick Read stepped down on the finish of final 12 months. The firm appointed Della Valle as everlasting CEO in April to rework the business.

“What is going to change is the level of ambition, speed, [and] decisiveness of execution,” Della Valle stated in a recorded video on Tuesday.

Meanwhile, Vodafone has been in ongoing talks with CK Hutchinson, proprietor of rival telecommunications business Three UK, to hold out a merger. Vodafone stated that “there can be no certainty that any transaction will ultimately be agreed.”