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The Impact of Vodafone’s Job Cuts in Spain

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Jan. 25 2019, Updated 9:00 a.m. ET

Vodafone’s Spanish revenue declined

Vodafone (VOD) plans to eliminate as many as 1,200 jobs from its Spanish business, Reuters reported. Back in November last year, Vodafone talked of difficult business conditions in Italy and Spain and said it planned to reduce costs in those countries. Therefore, the planned job cuts in Spain seem to be part of Vodafone’s efforts to reduce costs in the country. 

For the six months through September 2018, Vodafone’s revenue from Spain declined 3.6% year-over-year to about $2.7 billion. Vodafone’s Spanish business suffered an adjusted operating loss of about $100 million in the six months through September 2018, compared to operating profit of $150 million a year earlier.

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Operators cutting costs

Vodafone isn’t the only operator trying to adjust its workforce in response to changing economic conditions. Verizon (VZ), aiming to cut $10 billion costs by 2021, launched an early retirement program last year that is expected to see it removing thousands of management jobs.

Saving for 5G investments

In addition to responding to economic difficulties that have led to stagnating to declining sales, operators may also be looking at cost cutting to raise funds for 5G investments. Vodafone is one of the major operators racing to develop 5G networks, which require huge investments. T-Mobile (TMUS), for instance, is planning to invest as much as $40 billion on network developments as it transitions to 5G. Last year, T-Mobile inked two 5G deals worth $7.0 billion combined with Ericsson (ERIC) and Nokia (NOK).

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