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Vodafone's new CEO axes 11,000 jobs

AFP . London
16 May 2023 19:11:13 | Update: 16 May 2023 20:02:43
Vodafone's new CEO axes 11,000 jobs
— Courtesy/ Vodafone Australia

British mobile giant Vodafone is to axe 11,000 jobs over three years in the latest cull to hit the tech sector, as new boss Margherita Della Valle slammed recent performance.

"Our performance has not been good enough," Vodafone chief executive Della Valle said alongside news of flat annual revenue at the phone group.

At 11,000 positions, Vodafone is seen axing more than 10 per cent of its global workforce, which stood at 104,000 staff last year.

"To consistently deliver, Vodafone must change," Della Valle, a Vodafone veteran, added in a statement.

"We will simplify our organisation, cutting out complexity to regain our competitiveness," said the Italian national, recently appointed CEO on a permanent basis after a short spell as interim boss.

Vodafone's announcement follows the axing this year of tens of thousands of jobs across the global tech sector, including by Facebook parent Meta, as soaring inflation weakened the economy.

Della Valle's predecessor Nick Read stepped down in early December after a four-year tenure marked by a steep fall in the company's share price.

He left with Vodafone in talks over merging its UK operations with rival Three UK, owned by Hong Kong-based CK Hutchison.

Media reports say a deal worth £15 billion ($18.7 billion) is close to completion.

Vodafone on Tuesday added that group revenue stood at 45.7 billion euros ($50 billion) in its financial year to the end of March, almost flat compared with 2021/22.

It added that net profit surged to 11.8 billion euros from 2.2 billion, reflecting its part-disposal of the European mast division, Vantage Towers.

"We will be a leaner and simpler organisation, to increase our commercial agility and free up resources," the company said Tuesday.

It announced, "11,000 role reductions planned over three years, with both HQ and local markets simplification".

Vodafone, which has more than 300 million mobile customers in Europe and Africa, is heavily focused on accelerating the rollout of 5G in the UK.

Vodafone is banking on the merger of its UK operations with Three to expand broadband connectivity to rural communities and small businesses.

The rollout of faster 5G connectivity has been hampered by Britain's ban on the Chinese giant Huawei from involvement in the technology.

Shares slide

Following Tuesday's announcements, shares in Vodafone slid 7.4 per cent to 83.33 pence in late morning deals on London's benchmark FTSE 100 index, which was up slightly overall.

Investors were spooked by news of a hefty drop in free cash flow this year.

"Della Valle says she wants to focus on customers, simplicity and growth. It is the latter which may well determine if she is perceived as a success by shareholders," noted Russ Mould, investment director at AJ Bell.

She "has been at the company for some time and needs to demonstrate she can really be the breath of fresh air the company needs".

Alongside her role as CEO, Della Valle remains chief financial officer until a replacement is found.

Vodafone last week announced a strategic partnership with the United Arab Emirates peer e&, its largest shareholder, to collaborate on procurement and cross-border digital services.

At the end of 2022, Vodafone unveiled a blockbuster deal with investment firms GIP and KKR to form a joint venture that would maintain its majority stake in Vantage Towers.