Telefónica, the Spanish telecommunications giant, is preparing one of the most drastic slimming treatments in its history. The unions are discussing plans to cut more than 5,300 jobs in Spain alone and the plans have been communicated to them by the company. The earthquake occurred as telecom companies, squeezed by debt, investment and a structural slowdown in the sector, tried to reinvent themselves.
The numbers
According to UGT, the plan is surgical in nature and impacts the group’s pillars: 3,649 positions at Telefónica España, 41% of the workforce; 1,124 on Telefónica Móviles (31.3%); 267th on Telefónica Soluciones (23.9%). And that’s not all: another 279 layoffs are expected at Movistar+, the group’s TV offering, equivalent to 32.4% of employees. The numbers depict a radical transformation, not a simple renovation. Also because they arrive after another downsizing, namely in 2023, when 3,421 positions were eliminated, equivalent to 16% of the staff in Spain.
Group account
The operation is rooted in accounts: in the first nine months of the year, the company recorded a net loss of 1.08 billion and announced a savings plan of 3 billion by 2030. The choice to halve the dividend caused its shares to plunge on the stock market by 13% in one session, the third worst collapse ever. This latest decision is part of the new “Transform & Grow” plan presented by new CEO Marc Murtra, who has been in the role since January. The aim, the group explained at the start of the month on the occasion of Capital Markets Day, is “to reduce debt by bringing the net debt/net profit ratio to 2.5 times by 2028”, compared with the current 2.9 times. Murtra wants a leaner company focused on four key markets – Spain, Germany, the UK and Brazil – with organic growth in revenue and Ebitda of between 1.5% and 2.5% in the 2025-2028 period and up to 3.5% in 2030.
However, JPMorgan analysts also noted that the new guidance on free cash flow – 1.9 billion this year, versus a forecast of 2.6 – was 20% lower than expectations for 2028. Finally, looking at shares in the stock market, Telefónica posted the second-worst performance in the Stoxx Europe 600 Telecommunications index in the last three months, with a decline of 21%, compared with about -7% of the benchmark.
The role of the state
The state, through Sepi, is also the operator’s main shareholder, acquiring 10% of the capital in 2024 for 2.285 billion euros. These are variables to consider in operations that also stem from the evolution of technology: automation and the break with the old copper networks, which are being replaced by fiber, allow all operators to operate with less staff. However, unions have stressed that the principle of voluntary exit is unlikely to be compromised.
