Vodafone says headcount grew in 2023 despite plan to cut 11,000 jobs

Per-employee revenues fell last year at Vodafone, which seems to have made no meaningful progress toward its target of cutting jobs.

Iain Morris, International Editor

May 30, 2024

5 Min Read
Vodafone CEO Margherita Della Valle
Vodafone CEO Margherita Della Valle last year announced plans to shed 11,000 jobs.(Source: Vodafone)

Margherita Della Valle did not sound afraid to cut jobs in May 2023, just a few weeks after she had been officially confirmed as Vodafone Group's boss. Over the next three years, she said at the time, some 11,000 positions would go at a company then employing around 104,000 people worldwide, contractors included. But Vodafone's latest annual report, out this week, shows that headcount has not changed much since Della Valle took charge – rather like company sales. Some vigorous pruning may lie ahead.

What remains unclear, of course, is whether Della Valle meant there would be a net headcount reduction of 11,000 jobs. Companies often lay off staff in one area only to bulk up elsewhere, and Vodafone has publicly been adding thousands of software engineers to its workforce (although largely by retraining people it already employed, it says). But shareholders will be disappointed if both revenues and headcount continue along their current trajectories, and there is little prospect of sales growth.

At a quick glance, Vodafone may appear to have cut thousands of jobs since this time last year. Workforce totals are presented numerous times by the operator in its latest corporate publications, and the figures – somewhat confusingly – do not align, despite always referring to the year average. But the one constant for years has been the "employees" section of the annual report, which features breakdowns by activity and geographical segment. For that reason, Light Reading prefers this to other metrics, and it shows year-average headcount dropped by 10,930 between 2023 and 2024 (meaning the 12 months to March, in each case), giving Vodafone 87,173 employees in total.

Divestment, not simplification

The drop, however, is explained mainly by Vodafone's decisions under Della Valle to exit the Italian and Spanish markets, both of which are now marked as "discontinued" operations. Presumably, this is not what Della Valle had in mind when she talked about cutting 11,000 jobs to "simplify" the organization. Quitting those countries is also largely responsible for a €9 billion (US$9.8 billion) plummet in headline sales, to €36.7 billion ($39.8 billion) for the 2024 fiscal year. Vodafone's revenues per employee, based on these numbers, fell from about €466,000 ($505,700) in 2023 to €421,000 ($456,850) a year later.

Drawing on other metrics instead does not improve the story. In the last couple of years, Vodafone has started to publish workforce numbers in its ESG updates. Including figures for contractors as well, these show that average headcount from "direct" continuing operations grew 1,325 last year, to 92,735 employees. Since 2020, Vodafone has gained 3,435 people. Using these totals and Vodafone's sales from continuing operations for the last two fiscal years, per-employee revenues declined 4% in 2024, to about €396,000 ($429,700).

Vodafone could always "back end" the redundancies program and go on a crash diet in early 2026, like someone desperately shedding pounds before beach season. Regardless, investors and analysts usually pay little attention to staff numbers – talk of job cuts is more exciting to headline writers – and they may not care about any workforce developments provided overall costs fall and profits rise.

But Vodafone's staff costs have been escalating. In 2024, the operator spent about a fifth more on labor expenses for continuing operations than it did two years earlier, despite adding fewer than 200 employees over this period, according to the staff section of its annual report. This figure of about €5.5 billion ($6 billion) represented about 17% of total operating costs last year. And the software engineers Vodafone is eager to recruit are expensive. Retrained employees, if they are capable, could feasibly earn more outside the telecom sector.

Savings will be hard to find in other areas. Energy consumption was up 3% last year, and prices have been volatile. Capital intensity – expenditure as a percentage of sales – is expected to remain at roughly the same level in the future, Della Valle has indicated. Vodafone spent €6.3 billion ($6.8 billion) on what it refers to as "capital additions" in its 2024 fiscal year, putting capital intensity at 17%.

AI, what is it good for?

Vodafone, meanwhile, has previously dismissed talk of automation and artificial intelligence (AI) as destroyers of jobs. This is in marked contrast to BT. Before stepping down as its CEO, Philip Jansen last year said he expected about 55,000 of 130,000 jobs (including contractors) to be cut at the UK telecom incumbent by 2030, with AI claiming 10,000 of them. Plans have not changed under Allison Kirkby, his successor, who recently increased dividends and guided for juicier profits in the future as costs fall.

BT's shareholders seemed to appreciate all that, and Vodafone's apparent wariness of linking AI to job cuts could somewhat undermine the technology's appeal to its own investors, led to see it as an efficiency measure. As an aid to infrastructure planning and management, AI could help companies to cut energy bills and spend less on network maintenance and upgrades. But if it has little impact on staffing levels, it will not make as big a difference to overall costs. And far less obvious is how it could boost telco revenues.

Only the most heartless investor applauds job losses, but Vodafone's adjusted EBITDAaL (earnings before interest, tax, depreciation and amortization after leases), which is its preferred measure of profitability, has been in decline. As a percentage of revenues generated by continuing operations, the figure dropped from 34% in 2022 to 30% in Vodafone's last fiscal year. How it can reverse that decline if not by eliminating roles is what shareholders will want to know.

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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