Telecommunications company, Vodafone has unveiled a turnaround plan to revive its fortunes following years of poor performance as it has planned on Tuesday to cut down 11,000 jobs over three years.
According to Vodafone in a statement, the job cuts would affect the firm’s UK headquarters and operations in other countries as shares has slid more than 4% in London, CNN reports.
Sharing his thoughts concerning this development, CEO, Margherita Della Valle said, “Our performance has not been good enough,”
“We will simplify our organization, cutting out complexity to regain our competitiveness.”
The company twenty years ago, achieved the feat of being the world’s biggest mobile telecom group, after buying Germany’s Mannesmann in 2000 in the largest takeover in history which was valued above $190 billion.
However, Vodafone has also struggled to retain market share, despite having businesses in 21 countries and partnership agreements with local operators in another 46 locations.
On staff strength, its latest annual report reveals that Vodafone employs 104,000 people worldwide. Apart from the United Kingdom, it is a major provider of mobile networks in Germany, Spain, Italy and parts of Africa.
Speaking on the current areas of concentration for growth, Della Valle, with almost 30 years experience in the company, said her priorities were “customers, simplicity and growth,” after she was appointed to the role three weeks ago.
According to McKinsey, European telecoms companies have fared particularly poorly over the past decade, delivering lower returns to shareholders than in the United States.
Della Valle, while commenting on the situation, said in a video posted to the company’s website, that within a challenging sector, Vodafone’s performance relative to peers had “worsened over time.”
“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.