Telefonica said on Tuesday that it had reached an agreement with the union to cut about 15 percent of its employees in Spain through voluntary layoffs, a layoff plan that is expected to cost 1.5 billion euros ($1.7 billion) in 2021, Reuters reported.
Telefónica said in a filing to the stock market regulator that the plan to lay off about 2,700 employees in an increasingly competitive market in early 2022 would bring cost savings of more than 230 million euros per year in 2023.
"As employees will leave in the first quarter of 2022, this will have a positive impact on free cash flow in 2022 and result in cost savings," the company said. ”
Telefónica said the layoff program, which is open to all employees born in 1967 and earlier and who have worked for the company for at least 15 years, will limit the percentage of departures in certain areas.
Telefónica initially intended to vacate a business unit dedicated to cybersecurity, marketing and artificial intelligence, but was opposed by unions. The company initially intended to offer a package to about 1,800 employees.
Telefónica is the third largest telecommunications company in Europe with 18,500 employees in Spain. Before Telefónica made layoffs, its rivals Vodafone and Orange took similar steps in recent months.
Telefónica employs nearly 114,000 people worldwide.
Telefónica has struggled to cope with incentive competition in the Spanish market and pressure from investors at a time when 5G infrastructure needs to be financed. (C114 Ace)