2023-05-16 11:15:52
The British telephony group Vodafone announces this Tuesday 11,000 job cuts over three years, in an attempt to revive its competitiveness in the face of performance and action at half mast for several years. This represents just over 10% of the company’s workforce, which reached 104,000 people last year.
“Our performance has not been good enough” and “Vodafone needs to change,” commented new chief executive Margherita Della Valle in a results statement for the 2022/2023 financial year. It reports stagnant revenue at 45.7 billion euros, with good sales in Africa but poor revenue in Europe, its main market.
If the operating profit increased to 14.3 billion euros over the period against only 2.8 billion during the previous financial year, it is mainly thanks to the 12.3 billion euros generated with the demerger of Vantage Towers , floated on the Frankfurt Stock Exchange. “Vodafone’s comparative performance has deteriorated over time and this is reflected in the customer service experience,” insists the manager.
Refocus on Europe and Africa
Vodafone’s announcement comes against a backdrop of a cost of living crisis, inflation at around 10% in the UK, the highest in the G7, and economic uncertainty. In recent months, American tech giants in particular have eliminated tens of thousands of jobs.
Vodafone announced in early December the departure of the previous leader Nick Read, after four years at the head of the British telecommunications group, in a context of poor performance. Ms. Della Valle, until then financial director, then took over on an interim basis before being confirmed in the post last month. The group’s share fell 3.73% to 86.67 pence sterling (about 1 euro) around 07:30 GMT on the London Stock Exchange. It was worth almost 200 pence sterling (2.30 euros) five years ago.
Vodafone, a heavyweight in the sector in Europe, has been carrying out a restructuring for several years which has notably led it to refocus on Europe and Africa. Last week, the operator and Emirates Telecommunications (e&), which became the largest shareholder in the British telephony group a year ago, announced a “strategic partnership” agreement.
The e& group, which has gradually increased its stake in the British operator over the past year to reach 14.6% of the capital today, is officially designated “Vodafone’s reference shareholder” in a press release.
Sufficient measures?
In early May, press reports reported an imminent £15 billion merger between Vodafone and Hong Kong holding company CK Hutchison in UK mobile telephony. Vodafone, which did not wish to comment on this information, indicated in October that it was in discussions to merge its activities in the country with Three UK, a subsidiary of CK Hutchison, in order to combine their forces in 5G.
“We had come to expect a lackluster performance from Vodafone of late and the annual results do nothing to change that. Higher energy costs and continued weakness in Germany meant earnings came in below the company’s recently lowered guidance,” said Hargreaves Lansdown analyst Matt Brizman.
With the action backing off, he remarks that Ms. Della Valle’s honesty is “refreshing but not enough to keep the action from falling”. Despite the announced job cuts and restructuring plan, “the markets will need to see tangible results”.
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