The British mobile communications group Vodafone is tightening the savings screw. About a tenth of the workforce is to be cut within three years. Jobs of this size are also being cut in Germany.
The growth of Vodafone has recently weakened significantly, and the new CEO Magherita Della Valle is drawing consequences from this: the mobile phone group is facing austerity measures with significant job cuts.
In the next three years, 11,000 jobs would be cut worldwide and the group would be streamlined, according to Della Valle today. That is about ten percent of all employees. “Our performances were not good enough. We will simplify our organization to regain our competitiveness.”
Della Valle initially took over the job on a transitional basis at the turn of the year. She was then appointed as the regular CEO of the British mobile operator last month.
Fund inflows collapse
The group management is reacting to weak business figures. In the past 2022/2023 financial year, group sales increased by only 0.3 percent to 45.7 billion euros. Increased energy costs, but also a weakening business in Germany caused the operating result to drop by 1.3 percent to 14.7 billion euros.
The prospects for the 2023/2024 financial year that has just started are also bleak: the company expects the inflow of funds to collapse by around a third to 3.3 billion euros. Experts had previously expected 3.6 billion euros.
In Germany, 1,300 of the 14,300 full-time jobs are to be cut by March next year, although this was already known. In Germany, administrative jobs are particularly affected; on the other hand, the company is increasing “customer-related areas” such as service and technology by around 400 jobs. This would reduce the number of employees in Germany by 900.
Tough competition in the German mobile communications market
Vodafone is under pressure in the important German mobile communications market. While the competitors Deutsche Telekom and Telefónica (O2) are on the rise, the number of Vodafone customers in Germany is falling.
Vodafone investors withdraw after the publication of the group figures. At times, the share fell by almost five percent on the London Stock Exchange. Experts such as Akhil Dattani from the US bank JPMorgan consider the results of the telecom group to be “weak” and this also applies to the outlook for the current financial year. The updated strategy is uninspiring.
Analyst Matt Britzman from wealth manager Hargreaves Lansdown praised the openness of the new CEOs and management’s plans, but the market wants to see concrete results.