British telecom major Vodafone said that it will cut 11,000 jobs over the next three years, as CEO Margherita Della Valle seeks a ‘simpler’ organisation and forecasts little or no growth in earnings in the new financial year. “We will be a leaner and simpler organisation, to increase our commercial agility and free up resources,” she said in a statement. This comes after Vodafone reported that it will generate 3.3 billion euros of cash in the ongoing financial year, down from 4.8 billion euros in the year ended March.
“Today I am announcing my plans for Vodafone. Our performance has not been good enough. To consistently deliver, Vodafone must change. My priorities are customers, simplicity and growth. We will simplify our organisation, cutting out complexity to regain our competitiveness,” said Margherita Della Valle. “We will reallocate resources to deliver the quality service our customers expectations and drive further growth from the unique position of Vodafone Business,” she added.
Strategic changes awaited at Vodafone
Vodafone said that its action plan is focused on three priorities including significant investment reallocated in FY24 towards customer experience and brand, 11,000 role reductions planned over three years, with both HQ and local markets simplification, and Germany turnaround plan, continued pricing action and strategic review in Spain. “We will change the level of ambition, speed and decisiveness of execution. We will have empowered markets focused on customers, scale up Vodafone business and take out complexity to simplify how we operate,” the CEO said.
Vodafone is working towards an aim to be a best-in-class telco in Europe and Africa, and become Europe’s leading platform for business. Besides refocusing on delivering the customer expectations, Margherita Della Valle said, “We will rebalance our organisation to maximise the potential of Vodafone business, which continues to accelerate growth, has a unique set of capabilities and has a strong position in a large and growing market as organisations digitise.” She also maintained that the company will focus on resources on a portfolio of products and geographies that is “right-sized for growth and returns over time”.
Earlier in November 2022, Vodafone had announced a cost-cutting plan, including job cuts in order to address rising energy bills and inflation after cutting its annual profit forecast. Later next month, the then CEO Nick Read had resigned.
Vodafone’s performance in FY23
While FY23 performance slowdown for Vodafone was in line with expectations, it posted good performance in Vodafone business with 2.6 per cent service revenue growth while Group revenue increased by 0.3 per cent to 45.7 billion euros driven by growth in Africa and higher equipment sales, offset by lower European service revenue and adverse exchange rate movements. Adjusted free cash flow of 4.8 billion euros, reflected lower adjusted EBITDA and tax phasing.