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Vodafone’s New CEO Cuts 11,000 Jobs and Warns No ‘Quick Fix’

Vodafone's Margherita Della pledges to slash jobs and simplify its corporate structure.

Workers carry wooden boards past a Vodafone Group Plc store in Worthing, UK, on Monday, May 15, 2023. Vodafone's full-year results, on Tuesday, May 16, give new chief executive officer Margherita Della Vallean opportunity to lay out her vision, which could entail cost cuts and a sustained dividend, Bloomberg Intelligencesaid.
Workers carry wooden boards past a Vodafone Group Plc store in Worthing, UK, on Monday, May 15, 2023. Vodafone's full-year results, on Tuesday, May 16, give new chief executive officer Margherita Della Vallean opportunity to lay out her vision, which could entail cost cuts and a sustained dividend, Bloomberg Intelligencesaid.
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Vodafone Group Plc’s new chief said her plan to turn around the telecommunications carrier — announcing its biggest-ever job cuts and streamlining operations — isn’t going to pay off immediately.

Chief Executive Officer Margherita Della Valle forecast flat profit and a roughly 30% decline in free cash flow for the fiscal year in a statement on Tuesday, missing analysts’ estimates and helping send shares down to their lowest level since 1997. That’s despite her vows to cut 11,000 full-time jobs — about 12% of the company’s overall workforce — over the next three years, improve performance in Germany and start a strategic review of its Spanish operations.

Della Valle, a 29-year Vodafone veteran who previously served as chief financial officer and interim CEO before she was made permanent in the top role last month, has been charged with turning around the company, which has suffered from a lagging share price and difficulty consolidating its sprawling global operations. 

Read More: Vodafone’s New CEO Scaled Corporate Ladder From Italian Startup

“This will not be a quick fix,” Della Valle said. “The steps we have taken in the last few years have probably been too incremental. We need to be much deeper and faster.”

Shares fell as much as 7.7% in London trading on Tuesday, hitting 83.13 pence, their lowest level since 1997. 

Adjusted free cash flow will drop to €3.3 billion in the fiscal year ending in March, the company said. Much of that decline is due to a change in German law that affects how Vodafone bills customers, a spokesman said. A company-compiled consensus of analyst estimates had put the figure at €3.6 billion.

Read More: Vodafone Falls to 1997 Low With No Pivot Seen: Street Wrap

Earnings before interest, taxes, depreciation and amortization after leases are expected to be €13.3 billion this year, which Vodafone described as “broadly flat” after factoring in asset sales. 

“Our performance has not been good enough. To consistently deliver, Vodafone must change,” she said in the statement. “My priorities are customers, simplicity and growth. We will simplify our organization, cutting out complexity to regain our competitiveness.”

A long-awaited merger with British rival Three UK, owned by CK Hutchison Holdings Ltd., was not announced, seven months after the company first confirmed discussions.

“We are progressing — and I need to say up front, it’ll take as long as it takes to get a good deal,” Della Valle told reporters. 

--With assistance from Henry Ren.

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