Telecom major Vodafone Group on Tuesday announced to cut 11,000 jobs in the next three years as the Berkshire-based company looks to become "leaner and simpler." With this, the company also forecasts little or no growth in the new financial year.
"Today I am announcing my plans for Vodafone. Our performance has not been good enough. To consistently deliver, Vodafone must change. My priorities are customers, simplicity and growth. We will simplify our organisation, cutting out complexity to regain our competitiveness. We will reallocate resources to deliver the quality service our customers expect and drive further growth from the unique position of Vodafone Business," says Margherita Della Valle, group chief executive, Vodafone Group.
The company is also planning on a Germany turnaround plan, continued pricing and strategic review in Spain. It'll be focussing on customers, simplicity and growth in the upcoming year. According to Valle, a significant investment has been reallocated in FY24 towards customer experience and brand.
Valle, who took over in December last year as a predecessor of Nick Reed, says the company will be focusing on European and African markets. "We will rebalance our organisation to maximise the potential of Vodafone Business, which continues to accelerate growth, has a unique set of capabilities and has a strong position in a large and growing market as organisations digitize," says Valle.
"We will be a leaner and simpler organisation, to increase our commercial agility and free up resources. We will focus our resources on a portfolio of products and geographies that is right-sized for growth and returns over time," she adds.
In FY23, according to Valle, Germany remained under pressure with -1.6% service revenue growth and -6.1% adjusted EBITDA growth. The group revenue increased by 0.3% to €45.7 billion driven by growth in Africa and higher equipment sales, offset by lower European service revenue and adverse exchange rate movements. The company's adjusted EBITDA declined by 1.3% to €14.7 billion due to higher energy costs, and commercial underperformance in Germany.
For FY24, the company expects adjusted EBITDA to be 'broadly flat' at around €13.3 billion; and adjusted free cash flow to be ‘around’ €3.3 billion, reflecting expected working capital movements, interest and dividend receipts, owing to dwindling global macroeconomic situation.
The development comes as several organisations have resorted to laying off employees as a cost-cutting measure due to macroeconomic challenges. Earlier this month, LinkedIn and Cognizant laid off 716 and 3,500 employees, respectively. In January, Microsoft announced it would lay off about 10,000 employees or 5% of its workforce by the end of the third quarter of CY23. Amazon laid off 27,000 employees, whereas Meta Platforms Inc has already trimmed 13% or 11,000 jobs of its workforce. Google also sacked around 12,000 roles in one of the highest headcount reductions in the past year. Twitter also sacked 50% of its workforce. Snap, the parent company of the social media platform Snapchat, sacked 20% of its staff.