Vodafone shares fall 7% after a record 11,000 job cuts

Vodafone Shares fell more than 7% on Tuesday after the British telecoms company announced plans to cut a record number of jobs and forecast a fall in free cash flow.

“Our performance wasn’t good enough. To deliver consistently, Vodafone needs to change,” recently appointed CEO Margherita Della Valle said in a candid statement on Tuesday.

Vodafone announced it would cut 11,000 jobs over three years, out of a total workforce of just over 100,000. This is the largest round of cuts in the company’s history, Reuters reported.

“My priorities are customers, simplicity and growth. We will simplify our organization and reduce complexity to restore our competitiveness. We will reallocate resources to deliver the quality service our customers have come to expect and to drive continued growth from the unique position of Vodafone Business,” said Della Sagte Valle.

Vodafone reported revenue of 45.7 billion euros ($49.7 billion) for the fiscal year ended March 31, 2023, roughly flat from the prior year.

However, the company issued a bearish forecast for the fiscal year ending in March 2024, saying free cash flow will fall to 3.3 billion euros from 4.8 billion euros a year earlier. Free cash flow is a measure of how much cash a company has left after paying for operating costs and other expenses.

Vodafone shares fell 7% on the bleak outlook.

Vodafone is under pressure in key markets such as Germany and Italy due to fierce competition.

Investors have criticized the company for acting too slowly and not making the necessary changes to get the business back on track.

Vodafone has been in a period of transition since the resignation of its former CEO Nick Read late last year. The company appointed Della Valle as permanent CEO in April to transform the company.

“What will change is the level of ambition, speed, [and] Determination of execution,” Della Valle said in recorded video on Tuesday.

Meanwhile, Vodafone is in ongoing merger talks with CK Hutchinson, owner of rival telecoms company Three UK. Vodafone said that “there can be no certainty that a transaction will ultimately be agreed”.