Vodafone said Tuesday it would cut 11,000 jobs over three years, as the telecom company unveiled a turnaround plan to revive its fortunes following years of poor performance.
The job cuts would affect the firm’s UK headquarters and operations in other countries, Vodafone
(VOD) added in a statement. Shares slid more than 4% in London.
“Our performance has not been good enough,” CEO Margherita Della Valle said. “We will simplify our organization, cutting out complexity to regain our competitiveness.”
Two decades ago, Vodafone was the world’s biggest mobile telecom group, having bought Germany’s Mannesmann in 2000 in the largest takeover in history. The deal was valued above $190 billion.
But the company, which has businesses in 21 countries and partnership agreements with local operators in another 46 locations, has struggled to retain market share.
Vodafone employs 104,000 people worldwide, according to its latest annual report. Apart from the United Kingdom, it is a major provider of mobile networks in Germany, Spain, Italy and parts of Africa.
Della Valle, who was appointed to the role three weeks ago after almost 30 years with the company, said her priorities were “customers, simplicity and growth.”
European telecoms companies have fared particularly poorly over the past decade, delivering lower returns to shareholders than in the United States, according to McKinsey.
Within a challenging sector, Vodafone’s performance relative to peers had “worsened over time,” Della Valle said in a video posted to the company’s website.
“Our performance relative to our major competitors in our largest markets has not been good enough, and we know that this is strongly connected to the experience of our customers not being good enough,” she added. Shares in Vodafone have fallen 28% over the past year.
Under its turnaround plan, Vodafone would invest more in its customer experience and also direct more resources towards Vodafone Business, serving corporate clients, which was growing in nearly all the company’s European markets.
The strategic overhaul comes as Vodafone’s results showed revenue for the year to March grew by just 0.3% to €45.7 billion ($49.8 billion). Adjusted earnings declined to €14.7 billion ($16 billion), below the company’s own guidance, because of high energy prices and a weak performance in Germany, its biggest market.
Vodafone said it would generate free cash flow of around €3.3 billion ($3.6 billion) for this financial year, compared to €4.8 billion ($5.2 billion) for the year to end March.
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