Telefónica to Cut 5,500 Jobs at a Cost of €2.5 Billion as Part of Cost Reduction Plan

Madrid | EcoPulse24

Spanish telecommunications company Telefónica has announced it will incur a total cost of €2.5 billion to implement a voluntary redundancy program involving around 5,500 employees. This initiative is part of a comprehensive plan to reduce costs and enhance operational efficiency over the coming years.

According to a regulatory filing, Telefónica has reached an agreement with labor unions to carry out the workforce reduction, which is expected to generate annual savings of about €600 million starting from 2028. The company expects the positive impact on cash flows to begin in 2026, with employee departures starting in the first quarter of next year.

This measure is part of a wider strategy led by Chairman Mark Mortera, who has previously emphasized the need to cut operating expenses. Earlier, the company lowered its free cash flow forecasts for the year and halved its dividend payouts.

Data shows Telefónica’s shares have declined by around 14% since the start of the year, trading at their lowest levels since 2022, reflecting the pressures the company faces in the European telecoms market.

Telefónica previously carried out a similar program in 2023, resulting in 3,421 job cuts in Spain, equivalent to about 16% of its local workforce at the time. The company currently employs approximately 25,000 people in Spain and around 80,000 worldwide.

These actions are part of broader efforts by major European telecom operators to adapt to a challenging operating environment characterized by sluggish growth, rising network investment costs, and competitive pressures, as markets move to restructure business models to support financial sustainability.