Telefonica to Cut About 5,000 Jobs in Spain to Lower Costs

(Bloomberg) -- Telefonica SA aims to cut about 5,000 jobs in Spain through a voluntary retirement plan, according to two people familiar with the matter, as it pushes to slash costs and boost its share price.

The phone company and unions have had preliminary discussions on a so-called incentivized retirement plan for workers over 53 years of age, said the people, who asked not to be named because the announcement hasn’t been made public. The carrier is set to present a formal proposal to unions on Wednesday, one of the people said.

The plan may be discussed at a board meeting today, which was brought forward by more than two weeks after Telefonica shares reached a 22-year low last month. Staff cuts are among several options that have been discussed by management.

A company spokesman declined to comment on the job cuts, which were first reported by Spanish newspapers.

Telefonica shares were down 0.7% as of 3:01 p.m. in Madrid.

What Bloomberg Intelligence Says:
Telefonica’s aim to reduce 20% of its Spanish workforce, about 5,000 employees, through a voluntary redundancy program, should help offset the profit drag from hefty content costs.
Telefonica Workforce Cut a Modest Help for Margin Woes: React
-- Erhan Gurses, BI telecom analyst

Telefonica has occasionally used early retirement offers to slash the size of its staff over the past decade. The most recent was in 2016, when the company took a 2.9 billion euro ($3.2 billion) charge upfront for an early retirement program.

The latest offer will also include “reskilling” programs for remaining employees to develop talents related to new technologies such as the internet of things and big data, one of the people said.

To contact the reporter on this story: Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net

To contact the editors responsible for this story: Thomas Pfeiffer at tpfeiffer3@bloomberg.net, Jennifer Ryan

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