New slimming treatment for Telefónica: the Spanish telecoms giant will cut more than 5,100 jobs in Spain by 2026, or a third of its workforce in this country, as part of a savings plan supposed to improve its profitability .
These job cuts, announced Monday during a meeting between management and the unions, will affect all of the company’s activities in Spain, a union source told AFP. They will be implemented gradually between now and 2026, said a source close to the negotiations.
The telecoms group, present in 12 countries, including Brazil and the United Kingdom, currently employs 16,500 people in Spain, out of a total of 100,000 worldwide. It has already eliminated tens of thousands of jobs in the country in recent years.
Contacted by AFP, Telefónica management indicated that it had “communicated the adjustment to the various employee representatives” demanded from its various branches of activity in Spain, deemed necessary for “adapt to the transformation process (…) required by the new digital era”.
The group – which committed in early November to improving its cash flow and maintaining a dividend policy “attractive” for its shareholders over the next three years – however refused to confirm the number of job cuts.
According to the UGT union, the social plan will concern employees born before 1968 and with at least 15 years of seniority in the company. The number of departures could also be lower than the 5,100 positions announced, with certain employees being able to benefit from retraining within the company.
The UGT “will continue to fight” to defend the “requalification” employees and “mitigate the impact” of the social plan, specifies in a press release the union, which ensures “that there will be no agreement” with management without “guarantees” and measures promoting “stability” employees.
Heavy debt
A heavyweight in global telephony, Telefónica, like many of its European competitors, is faced with a heavy debt, which raises concerns about its solvency due to rising interest rates and high inflation, which is eating into its profitability.
To reduce this debt, the group has carried out significant asset sales in recent years, including the sale of the telecommunications towers of its subsidiary Telxius for 7.7 billion euros. It also carried out several voluntary departure plans, notably in 2015, 2019 and 2021.
These measures have made it possible to significantly reduce the debt, from 50 to 27.5 billion euros since the arrival of José María Álvarez-Pallete at the head of the group in 2016, but not its debt ratio, the company having at the same time seen its capitalization melt.
Since the financial crisis, Telefónica has seen its stock price fall sharply, going from almost 23 euros in 2007 to almost 4 euros currently. The capitalization of the telecommunications group thus increased from 100 to 21 billion euros.
The announcement of these job cuts comes at a key moment for the Spanish historic operator, which has been seeking for several years to refocus on its four main markets (Spain, Germany, United Kingdom, Brazil) to be more profitable.
At the beginning of September, the semi-public Saudi group Saudi Telecom Company (STC) announced the acquisition of 9.9% of the capital of Telefónica, for a total amount of 2.1 billion euros. This operation caused concern in the Spanish left-wing government, which was warned at the last minute.
In this context, the Public Company of Industrial Participations (SEPI), the investment body of the Spanish State, announced on October 31 that it was carrying out an “exploratory analysis” with a view to“a possible stake in Telefónica”.
According to the online media El Confidencial, SEPI – which left Telefónica in 1997 – would consider taking 5% of the capital, “in connection with other national investors”to “counterbalance the entry of Saudi Arabia” into the Spanish operator.
For some analysts, the arrival of STC, a long-term investor, is however likely to strengthen Telefónica, faced with increased competition since Orange and MasMovil announced in the summer of 2022 an agreement to merge their activities in Spain, currently awaiting a green light from Brussels.
