Vodafone cuts 11,000 jobs after securing deal with e&

Vodafone Group announced it will cut thousands of jobs just days after it agreed plans for closer commercial ties with UAE-based e&.

Margherita Della Valle, Vodafone’s new group chief executive, admitted the company’s performance “has not been good enough” after reporting a small rise in full year sales to nearly $50 billion and a fall in pre-tax profits.

“Vodafone must change,” she added in a statement less than a week after announcing e& as a cornerstone shareholder.

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The strategic relationship across Europe, the Middle East and Africa enables collaboration across a broad range of growth areas, as e& and Vodafone can benefit from each other’s geographic footprint. 

Paolo Pescatore, an analyst at PP Foresight, said that this was the start of a “long and painful journey” for Vodafone but he added that e& appears to have confidence in the company’s strategy which focuses on driving revenues, not only on cutting costs and driving greater efficiencies.

In March e&, formerly Emirates Telecommunications Group Company, increased its stake in Vodafone Group to 14 percent after initially purchasing 9.8 percent in May 2022.

“Behind the scenes, e& has been steadily increasing its stake which shows a strong endorsement in Della Valle and confidence in the future strategy,” Pescatore said. “Change needed to happen and she is moving quickly.

“Vodafone has an extensive presence across Europe and this remains an untapped opportunity for e&.” 

The deal includes jointly offering cross-border digital services to multi-national customers and public sector organisations. The firms may also adopt joint procurement.

The operators will work together on a technology roadmap as part of the agreement that sees e&’s CEO join the Vodafone board as a non-executive director.

Della Valle said: “This closer alignment allows us to capture opportunities in our respective markets and brings additional telecoms experience to our board.”

Hatem Dowidar, CEO of e&, added that it will “unlock opportunities for both companies”.

Vodafone said on Tuesday it will axe 11,000 jobs over the next three years – equal to around a tenth of its global workforce.

“My priorities are customers, simplicity and growth,” Della Valle said. “We will simplify our organisation, cutting out complexity to regain our competitiveness.” 

The telecoms giant has struggled with higher energy bills which are driving up costs and impacting its profits while also seeing weaker sales in European markets such as Germany, Italy and Spain.

By contrast, e& reported solid growth for 2022, netting a consolidated profit of more than $2.7 billion, up over 7 percent on the previous year.

e& also said its consolidated revenues surged to exceed $14 billion, a growth of nearly 5 percent year-on-year.