In a major restructuring move, Spanish telecommunications giant Telefonica has confirmed plans to reduce its workforce in Spain by approximately 5,500 employees. This significant decision follows an agreement reached with trade unions last week.
Scale of the Job Cuts
The scale of the reduction is substantial, representing nearly a quarter of the company's total workforce within Spain. Based on Telefonica's own figures from last year, the company employed around 25,000 people in its home country. Globally, Telefonica's workforce stands at about 100,000 individuals.
The job reductions will be executed through a voluntary departure plan, as confirmed in a company statement released on Monday via the stock market regulator. Telefonica estimates the financial cost of this employee exit plan to be around 2.5 billion euros ($2.9 billion) before taxes.
Strategic Restructuring and Financial Pressures
This workforce reduction is a direct component of a new, five-year strategic plan unveiled by the company last month. The plan signals a sharpened focus on Telefonica's core markets: Spain, Germany, the United Kingdom, and Brazil. Following the announcement of this strategic shift, the company immediately entered into negotiations with Spanish labour unions to discuss the necessary job cuts.
The drastic measures come against a backdrop of serious financial challenges for the telecoms firm. For the period from January to September this year, Telefonica reported a net loss of 1.08 billion euros. This loss was heavily influenced by setbacks linked to asset sales in its Latin American operations.
Broader Cost-Cutting Measures
In addition to the massive job cuts, Telefonica is implementing other austerity measures to strengthen its financial position. The company has declared it will slash its dividend by half next year, reducing it to 15 cents per share. This decision is a key part of a broader strategy aimed at reducing the company's significant debt burden.
The agreement with unions marks a critical, albeit painful, step in Telefonica's effort to streamline operations, cut costs, and refocus its business on what it deems its most vital markets for future growth and stability.
