Madrid, Spain–Spanish telecoms giant Telefonica said Wednesday it had reached a deal with unions to lay off up to one-fifth of its domestic workforce as part of its efforts to reduce costs.
The 3,421 job cuts are expected to take place during the first quarter of 2024 and will mainly involve employees who are 56 years or older in 2024 and have been with the company for at least 15 years, Telefonica said in a statement.
The former state monopoly estimated the layoff plan will cost around 1.3 billion euros ($1.4 billion) before taxes and will generate average yearly savings of around 285 million euros from 2025.
Spain’s largest telecoms company employs about 16,500 people in its home country, while its global workforce is over 100,000. It is present in 12 nations including Brazil, Britain and Germany.
The cuts were less severe than initially expected, with unions warning in December that Telefonica was looking to axe nearly 5,100 positions in Spain.
Telefonica also announced Wednesday it had reached a new collective bargaining agreement with unions which runs until 2026 and can be extended for another year, “with the aim of moving towards a more digital, flexible and prepared company for future challenges in a highly competitive context and in deep transformation.”
Several European telecoms firms, including BT and Vodafone, have announced job cuts this year as they grapple with intense competition in an increasingly low-cost market that is facing new technologies such as artificial intelligence.
Like most of its European peers, Telefonica is struggling with heavy debt loads, partly due to the hefty cost of building national fibre networks and introducing high-speed 5G mobile services.