Telefónica España warns of 20% job cuts

Telefónica España CEO Guillermo Ansaldo warned that the company could cut its 32,000-strong workforce by up to 20 per cent over the next three years as Spain's largest telco looks to mitigate the effects of the economic recession.

Speaking at a Telefonica investor conference, Ansaldo said, "There is further room to improve efficiency in Spain. We are ready to start negotiating a series of initiatives...that will affect approximately 20 per cent of our workforce," according to the Financial Times.

Telefónica has already instigated an initiative to reduce management positions by 6 per cent, while employees that do avoid job cuts will find salary increase harder to come by as the company moves away from inflation-based rises and links pay and benefit revisions to productivity rather than the consumer price index.

Ansaldo also confirmed that Telefónica España is looking at the potential for outsourcing some of its operations and would optimise its use of capital by selling non-core assets such as real-estate, and co-investing where appropriate. The first could reap up to €600 million, according to Bloomberg, while Ansaldo confirmed the latter would include mobile network sharing.

However, Ansaldo said that the majority of job cuts will be made in the wireline business and that Telefónica expects its revenue in Spain from fixed and mobile broadband and information technology services to climb significantly, prompted by explosive growth in mobile broadband. To maintain this growth, he stated that HSPA and LTE will be rolled out to deliver peak rates of at least 14.4Mbps peak to 100 percent of the population by year end 2013, rising from 50 per cent at the end of last year, and around 25 per cent of the population would be gain access to 42Mbps peak rates over the same period.

Ansaldo outlined revenue growth opportunities in the region of €1.2 billion to the end of 2013 and set a target of sustaining a 48-50 per cent market share of telecoms revenues for the 2013 financial year, at which point he expects the company to be through its recovery.

For more:
- see this Bloomberg article
- see this Financial Times article (sub. req.)
- see this Telefonica presentation

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