Vodafone shares took a hit today amid the company’s plans to lay off thousands of workers and properly allocate resources.
Vodafone shares (LON: VOD) He falls 7% on Tuesday after the mass layoffs of the British multinational telecom company were announced. In a statement, CEO Margherita Della Valle said the company’s plan to cut a record 11,000 jobs is necessary to stay profitable. Vodafone expected steady profit growth and indicated that the massive downsizing of the company would take place over three years. The cut represents the wiping out of just over 10% of the telecom giant’s total staff of 100,000.
Reflecting on Vodafone’s most significant staff reduction in the company’s history, the recently appointed Della Valle said:
“We weren’t doing well enough. To deliver consistently, Vodafone has to change.”
Moreover, the CEO also added:
“My priorities are customers, simplicity and growth. We will streamline our organisation, eliminating complexity to regain our competitive edge. We will reallocate resources to deliver the quality service our customers expect and drive further growth from the unique location of Vodafone’s business.”
Vodafone shares drop to 84.77 GBX amid layoffs and restructuring plans
Vodafone shares initially sank 7% after news of the layoffs but were trading down 5.84% at 84.77 GBX as of press time. The Berkshire-based telecom company faces stiff competition in the key markets of Germany and Italy. However, it has a German turnaround plan and a strategic review in Spain. Furthermore, Vodafone also plans to adapt its pricing measures to accommodate growth, with Della Valle saying it will “focus our resources on a range of products of the right size and geographies to drive growth and returns over time.”
The CEO confirmed that Vodafone will rebalance its organizational structure to improve Vodafone Business capabilities. The reason is that Vodafone Business is an important growth engine and has a strong position in an emerging digital market.
Vodafone aims to be a ‘leaner, simpler organisation’ focusing on the essentials
Vodafone plans to cover the stage amid investor criticism for moving too slowly and not embracing transformative changes quickly. According to Della Valle, BT will be “a leaner, simpler organisation” that increases commercial flexibility and frees up resources.
Vodafone reallocated significant investments in FY24 to customer experience and brand. This development comes in light of the company’s disappointing performance for fiscal year 2023.
Vodafone is also looking to refocus on core customer experience service quality to gain an edge in consumer markets. This also includes delivering the simple, quality experiences customers have come to expect from the brand.
For the fiscal year ending March 31, Vodafone reported revenue of €45.7 billion ($49.7 billion). This figure remained unchanged from the previous year, causing Vodafone to issue disappointing guidance for fiscal year 2024. For the fiscal year ending March 2024, the company said free cash flow would drop to €3.3 billion. Vodafone’s free cash flow was €4.8 billion in the previous year (FY23).
Vodafone is currently discussing a merger with Three UK owner CK Hutchinson. However, the telecom giant said there was no certainty that both parties would eventually agree to the merger.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify cryptocurrency stories down to the bare essentials so that anyone anywhere can understand without much background knowledge. When he’s not deep into cryptocurrency stories, Tolo enjoys music, loves to sing, and is a movie lover.