Global operator group Vodafone is today holding talks with labour unions in Spain regarding its plans to cut its workforce, a spokesperson has told Telecoms.com.

The news comes as Vodafone struggles in a challenging economic climate in Europe; Vodafone Group reported a pre-tax loss of £492m for the six months to September 30, 2012, compared with an £8bn profit a year earlier, and wrote down the value of its units in Spain and Italy by £5.9bn in November 2012, blaming market conditions in the two countries.

The operator said it will announce more details following today’s talks, but a spokesman for Spain’s UGT labour union told Bloomberg News that the operator could be slashing around 1,000 jobs, representing a quarter of its local workforce.

One of the contributing factors to Vodafone’s poor performance in Spain is the decision to cut handset subsidies in the market, according to Emeka Obiodu, principal analyst, telco strategy at Ovum.

“Vodafone’s decision resulted in it losing customers. France Telecom, which did not change its subsidy policy, sat there and scooped the market,” he explained.

“So the reason Vodafone is in this situation is a combination of economic circumstances in Spain and the different competitive strategies that Vodafone, and Telefonica too, have used compared with Orange and Yoigo.”

Obiodu added that while Telefonica has found it difficult to accept that its domestic business might be threatened, it too risks having to announce redundancies in Spain due to its decision to cut handset subsidies.

“Unfortunately, if the market conditions in Spain do not improve soon, Vodafone will not be the only one announcing redundancies,” he said.