Vodafone seems to be taking a page out of the tech industry under the leadership of its new boss Margherita Della Valle. She announced that in order to keep its ‘competitive edge’ the company might cut 11,000 jobs over a span of three years.
Ms. Valle was speaking against the backdrop of the company’s poor performance in its biggest market, Germany. There are reports of a possible drop in cash flow. Vodafone has performed poorer than most of its competitors in Europe. The company’s shares were trading 4% down, the lowest since January.
Vodafone employs over 90,000 people across Africa and Europe. There have never been these job cuts in the history of the company.
Della Vale took over as CFO last month with a clear mandate to turn the company around.
“To consistently deliver, Vodafone must change,” she said. “My priorities are customers, simplicity, and growth.”
She is mulling structural changes which could include a partial or complete sale of the company’s stake in Spain. Della Vale has three investors who would benefit from such a breakup of a company.
The company has forecast a cash flow of 3.3 billion euros ($3.6 billion) for this financial year, which is lower than 4.8 billion euros in the year to the end of March 2023. On Tuesday markets responded to this report and the share prices of Vodafone dropped.
The lower revenues have been attributed to changes in the law in Germany, which led to the later payment of bills.
Competitor Analysis
Vodafone missed its own guidance this year and it has been performing poorer than its competitors in the telecom sector.
Etisalat has already built up a 14.6% stake while French telecom giant Xavier Niel competes with Vodafone in Italy. Its partner in the Netherlands, Liberty Global is also one of their investors.
Analysts all three are well positioned to take over a part of Vodafone’s operations.
