No Italian Job for 1,130 Vodafone Workers

Iain Morris
News Analysis
Iain Morris, International Editor
3/12/2019



Vodafone's Italian business has revealed plans to cut around 1,130 jobs due to "extraordinary competitive pressure" and investment in new digital technologies that have made some roles redundant.

The operator has already presented its proposals to trade union representatives after witnessing a sharp fall in sales and profitability last year. Italy was one of the worst-performing of Vodafone's European subsidiaries in the six months to September 2018, with service revenues down 6.7% and earnings (before interest, tax, depreciation and amortization) falling a tenth compared with the year-earlier half.

The cuts would affect about 17% of the Italian company's entire workforce in 2018, according to Vodafone Group's most recent annual report, and follow a two-year period during which staff numbers have changed little.

By contrast, Vodafone's other European subsidiaries have already laid off thousands of employees since the 2016 fiscal year. Germany cut 1,144 jobs between 2016 and 2018, to leave it with 13,718 employees, while the UK business shrank by 944 roles over the same period, to 12,379 employees.

But the axe has fallen heaviest on the Spanish business, which has also blamed disappointing financial results on competitive pressure. Around 16% of more than 5,900 jobs were cut between 2016 and 2018, and Vodafone warned in January that it may need to axe another 1,200 positions.

In Italy, Vodafone has struggled in the face of new competition from Iliad, a low-cost French operator that arrived in the Italian mobile market last year. Vodafone lost more than 1 million mobile customers in Italy in 2018, finishing the year with about 21.2 million, according to its latest earnings report.

Like Telecom Italia, it also spent heavily during a recent auction of 5G spectrum that raised a staggering €6.55 billion ($7.4 billion) for the public purse, €4 billion ($4.5 billion) more than Italy's government had expected.

The outlay has put pressure on all Italy's operators, forcing Vodafone -- which spent €2.4 billion ($2.7 billion) on new 5G licenses -- into a network-sharing deal with Telecom Italia in advance of 5G rollout.

Under that agreement, Vodafone and Telecom Italia will share "passive" infrastructure, which includes masts and other non-electronic gear used in the construction of mobile networks, across about 22,000 sites.

In less densely populated areas of Italy, they also plan to share "active" gear, including basestations, and might extend that arrangement to cover cities, despite ruling out such a move in other countries. "In Italy we will explore if there are merits in doing urban [sharing]," said Nick Read, Vodafone Group's CEO, during a press conference at the recent Mobile World Congress.


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Vodafone Italy is under pressure to maintain network investments as rivals prepare to launch their own 5G services.

Some jobs will be phased out with the move to digital services that require less manpower, Vodafone seemed to indicate in its statement. "The drive toward more agile and digital business models requires a review of the organization and a radical simplification of the operating model to continue to invest, guarantee future sustainability and return to growth," said the company.

Vodafone executives in the UK have been drawing attention to an artificially intelligent "chatbot" that now handles many of the customer service interactions with Vodafone subscribers.

Last year, the operator launched an initiative allowing customer service assistants to retrain as coders, but it could not say how many employees have taken advantage of the scheme during a press briefing in London last week.

Automation technologies could have a similar impact on the network operations side of the business. Swedish equipment vendor Ericsson is one company to have recently launched an artificial intelligence (AI) system for managing and operating networks.

Demonstrating the Ericsson Operations Engine at a recent press event in London, Peter Laurin, Ericsson's head of managed services, blamed AI for some of the 8,000 job losses at his unit in the past year -- more than a fifth of the total number of managed services roles.

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— Iain Morris, International Editor, Light Reading

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