Telefonica staff exit plan oversubscribed

The Spanish incumbent has accepted applications from 3,393 employees willing to take it up on its latest layoff plan, which was offered to staff turning 56 years or older this year and with a seniority of more than 15 years, El Economista reported, citing unnamed sources.

In January Telefonica reached agreement with the unions over the voluntary exit plan, which it said would enable it to eliminate 3,421 positions before the end of March. This new press report claims it is shooting for a figure of 3,420 – we're not going to split hairs over such a small discrepancy – and as such will accept a further 27 applications on Monday to reach its total.

That will leave a few hundred staff disappointed. The layoff plan proved sufficiently popular as to have attracted 3,640 applications in total. But there is no indication that Telefonica will extend the scheme at this stage.

As previously reported, the bulk of the layoffs are at Telefónica de España, with 2946 applications accepted so far. 391 staff at Telefónica Móviles España and 56 at Telefónica Soluciones have also had their applications accepted.

The headcount reduction forms part of a broader drive by Telefonica to cut costs in its home market. The telco recently embarked upon its latest three-year strategic plan – dubbed GPS, the initials standing for growth, profitability and sustainability – which is all about increasing free cash flow and reducing debt. Like its peers elsewhere in Europe and further afield, it is looking to become leaner.

The voluntary layoffs plan carries a cost in the short term; Telefonica estimates it at around €1.3 billion before tax. But the telco is looking at annual cost savings of an average of €285 million from 2025 and predicts a positive impact on cash generation as soon as this year.

The telco has other tricks up its sleeve when it comes to cost-cutting.

Last week it announced it had extended a partnership with data centre infrastructure and services provider Vertiv with a view to improving energy efficiency. Under the terms of the deal, Vertiv will supply an energy-saving solution to be deployed across different areas of Telefonica's network in Spain. Telefonica expects it to save around 45 GWh per year within three years, which it says is equivalent to the energy consumption of about 13,000 homes in Spain.

The companies did not put a monetary value on that; as you might expect, the narrative around it is all about the sustainability angle.

"The initiative will help us meet our energy and emissions targets: to improve our energy efficiency with the goal of reducing the energy consumption per unit of traffic (MWh/PB) indicator by 90% by 2025, to reduce scope 1+2 emissions by 90% by 2030, and to be a net zero emissions company by 2040 across the entire value chain," said Enrique Blanco, Global CTIO at Telefónica. "We are aware that the best kilowatt is the one we do not consume. We don't want to stop here, so we will extend this successful project to as many locations as possible."

That expansion will include new sites in Spain, as well as possibly other Telefonica group companies too.

As much as Telefonica might want to push the environmental aspect of its network energy efficiency deal – and similarly focus on the digital transformation angle of its new strategic plan and headcount reductions – the financial side also looms large. The telco is saving money by cutting staff and using less power.