New Vodafone boss Margherita Della Valle said she would cut 11,000 jobs over three years to help the telecom group regain its competitive edge after it warned that a poor performance in its biggest market Germany would hit cash flow.

Shares in Vodafone, which have underperformed rivals in many of its major European markets, fell to their lowest level since early January and were trading down 4 per cent by mid-morning.

The job cuts are the biggest in the history of Vodafone, which employs 90,000 people directly across Europe and Africa.

Della Valle was given a mandate to turn Vodafone around when she permanently took on the top job from the role of CFO last month. She has three major investors on her shareholder register who could all benefit from a break up of the group.

“To consistently deliver, Vodafone must change,” she said. “My priorities are customers, simplicity and growth.”

Della Valle started cutting jobs when she took the helm at the start of the year, targeting Vodafone’s central operations in London. The new cuts would be spread across its markets, as well as more reductions in the centre, she told reporters.

Germany, Vodafone’s biggest market, was under performing, she added on Tuesday, while “structural change”, meaning a full or partial sale, was an option in Spain.

Tuesday’s share price fall was most likely down to its forecast of 3.3 billion euros ($3.6 billion) of cash flow this financial year, down from 4.8 billion euros in the year to end-March 2023, she said.

Analysts had expected 3.6 billion euros. The CEO put the lower forecast down to the timing of payments for cable TV in Germany due to a change in the law.

Vodafone’s dividend was a matter for the board, Della Valle said, but pointed to a “significant” cut in debt and said the group was comfortable with its leverage.

“The new CEO has decided to maintain its dividend (a missed opportunity in our view and a concern the company remains unwilling to take necessary bolder action),” analysts at JP Morgan Cazenove said.

Lagging rivals

Vodafone reported a 1.3 per cent decline in group core earnings to 14.7 billion euros for the year, missing its own guidance.

Della Valle said the European telecom market had long delivered a poor return on the capital invested in networks, but Vodafone’s relative performance had worsened over time.

Activist investors and rivals have also described the British group as unwieldy and slow to respond to market changes.

Emirati telecom firm Etisalat has built up a 14.6 per cent Vodafone stake and French telecom billionaire Xavier Niel, who competes with it in Italy, and Liberty Global, its partner in the Netherlands are also investors. Reuters