Telefonica to cut 5,000 jobs to slash costs, union says

[MADRID] Spain’s largest telecommunications operator Telefonica aims to cut at least 5,040 jobs as part of a sweeping plan to slash costs, the top union representing its workers said. 

The cuts, affecting about a fifth of the carrier’s Spanish workforce, will apply to three Telefónica units in Spain, a spokesperson for the UGT union said, following talks with the company on Monday (Nov 24). Telefónica is set to hold meetings with four other subsidiaries on Tuesday and announce further job cuts, the spokesperson said.

A representative for Telefónica declined to comment. 

The carrier’s chairman, Marc Murtra, this month outlined plans to cut operating expenses as the company trimmed its free cash flow outlook for this year and halved its dividend. The shares plunged 13 per cent on the day of the announcement, Telefonica’s third-worst stock rout on record.

In 2023, Telefonica cut 3,421 jobs in Spain, or about 16 per cent of the workforce. Telefónica employs about 25,000 people in Spain and about 80,000 people globally, according to a spokesperson. 

Telefonica was the second-worst performer on the Stoxx Europe 600 Telecommunications index over the past three months, with a 21 per cent slump, compared with a decline of about 7 per cent for the benchmark.

At its capital markets day on Nov 4, Telefonica also said it would rein in expenses through optimising networks and energy consumption, using artificial intelligence in customer service, real estate sales and simplifying the business. 

The Madrid-based company lowered its free cash flow guidance for this year to about 1.9 billion euros (S$2.85 billion), from about 2.6 billion euros. It also projected 2028 free cash flow that was 20 per cent lower than consensus expectations, according to JPMorgan analyst Akhil Dattani. The forecasts excluded commitments to employees.  

The new dividend policy also marked a departure from Telefonica’s traditional focus on rewarding shareholders. BLOOMBERG