As the Spanish telecom juggernaut prepares for a comprehensive strategy overhaul in November, Telefónica is thinking of laying off up to 7,000 employees. Although the business has not yet finalised the details, a Reuters official and internal sources both say that staff reductions are being considered.
On November 4, Executive Chair Marc Murtra is anticipated to present a new strategic direction. The majority of the proposed cuts are aimed at Spanish operations, including IT, broadband, and mobile services, and they may even make their way to Telefonica’s central offices for the first time.
After the next negotiations with unions, any employment actions would begin. The company hopes to reach an agreement by December 31 so that associated expenses can be included in the financials for the next year.
Layoffs Can Prove Profitable for Telefónica
In the midst of continuous digital changes, telecom companies’ attempts to optimise operations have been constantly monitored by investors. Given that Telefónica’s net debt is currently close to €27 billion, implementing layoffs could increase profit margins and free up money for much-needed network upgrades or debt reduction.
If the cuts appear credible, shares might respond favourably, but the true effect will rely on the final magnitude, voluntary adoption, and the rate at which the savings are converted into profits.
The Spanish corporation and its subsidiaries, Telefonica Moviles (the company’s mobile and broadband subsidiary in Spain) and Telefonica Soluciones (which provides outsourced IT services), are expected to account for the majority of the impacted employees, up to 5,000, according to the media reports. Employees at the corporate centre, who were previously exempt from redundancy plans, could also be impacted.
Troublesome Time for Europe’s Telecom Sector
Due to stagnant revenue and growing infrastructure expenses, major telecom companies in Europe are reevaluating everything from strategy to workforce. The sector as a whole is moving towards leaner, more tech-driven companies, as seen by Telefonica’s possible layoffs and extensive restructuring.
Such actions might set the tone for future employment cuts and investment strategies throughout the continent, as traditional revenue streams are under strain and competition is intensifying.
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•Telefónica plans to lay off up to 7,000 employees •Executive Chair Marc Murtra to present new strategy •Majority of cuts expected in Spain, impacting IT, •Layoffs aim to improve profit margins, reduce debt •Potential positive market reaction depends on final •Subsidiaries Telefónica Moviles and Telefónica |
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