The new boss of Vodafone, Margherita Della Valle on Tuesday said that she will be downsizing 11,000 jobs over the next three years in order to simplify the telecoms group and regain its competitive edge as it forecast a 1.5 billion euro drop in free cash flow this year.
This will be the biggest layoff in the history of Vodafone which employs nearly 1,00,000 people across Europe and Africa which makes it one of Britain's most popular corporate brands.
Della Valle, who was appointed permanently as CEO last month said, "Our performance has not been good enough. My priorities are customers, simplicity and growth."
Notably, Vodafone opened 4.5 per cent lower, the biggest faller in the FTSE 100 and dropped to their lowest level since early January.
Equity analyst with Hargreaves Lansdown Matt Britzman said, "Lacklustre performance has been something markets have come to expect from Vodafone of late, and full-year results didn’t buck the trend."
Vodafone's biggest market, Germany was underperforming, while Spain, which has suffered cut-throat competition in recent years, was under strategic review, said Della Valle.
Vodafone said that it would generate 3.3 billion euros, around USD 3.6 billion, of cash this financial year which is down from 4.8 billion euros in the year ending March 2023, underlining the pressure on the business. Analysts had expected cash generation to be around 3.6 billion euros.
For the year ending March, pressures in Germany and costs of energy shooting up resulted in a 1.3 per cent decline in Vodafone's group core earnings to 14.7 billion euros, which missed its own guidance.
European telecoms market had long delivered a poor return on capital investment in networks, Vodafone said, and its relative performance has further worsened over time.
Moreover, activist investors and rivals have described the British group as slow to respond to changes in the market scenario.
Meanwhile, Della Valle said that she would aim to maximise the potential of business customers, which has been the strength of Vodafone, while focus will be laid on basics like customer service in the consumer market.
Earlier this year, Vodafone cut down 1,000 jobs in Italy, while a media report suggested that the company was looking to cut down around 1,300 jobs in Germany.
Nick Read, Della Valle's predecessor had said that consolidation was required in major markets like Britain, where Vodafone was in talks with rival Hutchinson's Three UK for at least nine months.
However, Vodafone said on Tuesday that there could be no certainty that any transaction would be ultimately agreed and refrained from commenting further on the talks.