Telefónica has now detailed the economic impact of the extensive workforce reduction plan (ERE) agreed upon with unions across its operations in Spain. The operator estimates that the plan, which will affect several of the group's subsidiaries, will have an approximate cost of 2.500 millones de euros and will allow a significant reduction in its cost structure in the next years.
According to estimates reported to the stock market regulator, the adjustment will involve the exit of around 5.500 workerswith a guaranteed minimum of approximately 4.525 departures and a maximum that could exceed 5.000 people depending on the level of voluntary participation. In return for this initial investment, the company expects to achieve annual savings of close to 600 million euros from 2028 onwards, as part of the efficiency plan that the group is implementing.
A 2.500 billion euro redundancy plan and up to 5.500 job losses
The documentation sent by Telefónica to the National Securities Market Commission (CNMV) fixed around 2.500 million euros before taxes The provision associated with exit plans. The figure includes the seven affected companies due to the workforce reduction plan: Telefónica de España, Telefónica Móviles España, Telefónica Soluciones de Informática y Comunicación de España, Telefónica Audiovisual Digital (Movistar Plus+), Telefónica Global Solutions, Telefónica Innovación Digital and Telefónica, SA
The company explains that the current value of that expense corresponds to the set of compensation packages and coverages designed for employees who opt into the process. The number of departures falls within a range with a minimum of 3.765 job losses in the three major companies of the linked companies agreement (Telefónica de España, Telefónica Móviles and Telefónica Soluciones) and a ceiling of 5.040 in those same subsidiaries, in addition to the reductions in the other units.
In total, the company's internal calculations indicate that Around 5.500 people could leave the workforceThis represents approximately a quarter of the employees in the affected area in Spain. It is the most impactful redundancy process since the large-scale voluntary redundancy programs launched in the last decade and is part of a broader context of transformation of the telecommunications business In Europe, with pressured revenues and a strong investment effort in networks.
The trade unions have insisted during the negotiations on setting a minimum low floor To avoid the company resorting to mass layoffs, the agreement leaves open the possibility of exceeding those figures through voluntary redundancies. In fact, management believes it's feasible to reach the upper end of the range if the plan proves attractive to long-term employees.
Distribution of costs and most affected societies
The bulk of the financial effort is concentrated in the group's largest subsidiaries in the domestic market. Telefónica Spain and Movistar Plus+The company estimates a combined provision of approximately 2.300 millones de euroswhich covers most of the compensation and costs associated with departures. The rest, around 200 millones de euros, is linked to the so-called corporate units, which include Telefónica Global Solutions, Telefónica Innovación Digital and Telefónica, SA
In terms of employment, the negotiated figures point to a particularly significant adjustment in the traditional fixed-line services business. Telefonica of Spain have been agreed 2.925 casualties, almost a third of that company's workforce. In Telefonica Moviles The cuts will affect 720 workers, around 20% of its staff, while in Telefónica Solutions are expected 120 outputs, 11% of its personnel.
To those figures are added the 175 expected cancellations at Movistar Plus+, out of a total of approximately 860 employees, and the adjustments to the corporate perimeter: 294 departures at Telefónica SA, 182 in Telefónica Digital Innovation y 109 at Telefónica Global SolutionsAdding all the companies together, the minimum of 4.525 agreed departures can be increased to the maximum set in the agreements if the expected number of memberships is exceeded.
Telefónica emphasizes that Most processes will be structured through voluntary participationwith criteria based on age and seniority. In divisions covered by collective bargaining agreements, the company considers forced layoffs practically out of the question, while in other companies a mechanism has been set up to reach the agreed minimum numbers if the voluntary response is insufficient.
Average cost per employee and economic conditions
If the company's forecasts regarding the total number of job losses materialize, the average cost per worker It will be around 455.000 eurosThis figure represents an increase of around 20% compared to the previous plan, finalized at the beginning of 2024, in which the average amount was around 380.000 euros per employee and the overall cost was around 1.300 billion euros.
The new ERE includes different compensation tiers based on ageFor employees born between 1969 and 1971, the general scheme provides for a payment equivalent to 68% of the regulatory salary until age 63with a lower percentage from that age onwards. For the 1965-1968 cohorts, conditions decline to 62% of salary until age 63 and around 34% afterwards, while for those born in 1964 and earlier, coverage is around 52% up to age 63 and 35% thereafter.
In addition to these percentages on salary, the agreements include additional plugins such as the payment of a portion of pension plans, maintenance of Health insurance y volunteer bonuses in certain societies. These elements reinforce the plan's appeal to employees with longer tenure at the company, who are precisely the ones who account for the highest labor costs.
The unions have framed this process as one of the most expensive cases since 2017However, they recall that the program at that time had a different nature, as it did not involve the complete termination of the employment relationship in all cases. Since 2012, adding up the various severance plans, it is estimated that More than 26.000 workers have left Telefónica In Spain, a gradual adjustment linked to digitalization and the drop in revenue from traditional services such as copper.
Timetable for the workforce reduction and its effect on the group's cash flow
The process of joining the ERE will take place over several weeks. Registration will open on December 29th in most of the societies included in the agreement and will remain in effect until January 26While in the so-called GBUs or corporate units, the deadline will be extended a few days, until January 29. In the case of Movistar Plus+, the schedule is slightly shifted, and the sign-up period will begin on January 7 and end on February 6.
Once the application period has closed, the company must determine if it becomes necessary to resort to forced departures to reach the agreed minimums. Any potential vetoes or involuntary dismissals will be communicated, according to the agreed schedule, by mid-February in companies not covered by the collective bargaining agreement for affiliated companies. In subsidiaries with such agreements, both management and the unions consider this scenario highly unlikely.
From a financial point of view, Telefónica assures that, despite the high initial outlay, the impact on cash generation It will be positive from 2026 onwards.The reason is that actual employee departures will begin to occur. since the first quarter of 2026so that the reduction in the wage bill and other associated expenses will progressively offset the cost of compensation.
The company points out that the market has already factored this adjustment into its roadmap. After the financial details were released, the Telefónica shares fell by nearly 1% on the IBEX 35In a session of moderate declines for the index as a whole, the reaction reflects some caution regarding the size of the provision, but also the expectation that future efficiencies will contribute to improved margins.
A key aspect is that Cash generation has become the main benchmark indicator for the dividend of the operator. Therefore, the design of the workforce reduction plan takes into account not only cost cuts, but also the pace at which this will be reflected in the cash flow available to shareholders, a variable that management has placed at the center of its discourse in recent months.
Savings target: 600 million per year from 2028
Telefónica frames this workforce reduction plan within a broader program of cost savings and operational simplificationAccording to the figures reported, the direct annual savings The costs resulting from the workforce adjustment will be around 600 million euros from 2028Of that amount, approximately 500 million will be generated in Telefónica Spain and Movistar Plus+, while near 60 million will come from corporate units.
These estimates are integrated into the new strategic plan 2026-2030 presented by the company in early November, which sets as its overall objective the achievement of approximately 3.000 billion euros in efficiencies until 2030, of which Approximately 2.300 billion are expected by 2028Within that package, the company has quantified around 1.200 millones de euros the savings directly linked to the collective bargaining agreement signed with the unions.
In addition to the staff reduction, the plan includes internal reorganization measuresDigitization of processes and simplification of the operating model. The company insists that these changes are aimed at building a group more agile, flexible and digital, capable of responding to a highly competitive environment in the European telecommunications market and a demanding regulatory scenario.
In parallel, Telefónica faces other significant corporate moves, such as the review of its dividend policy and the decision of to delist from Wall Street Decades after its arrival in the United States, it has concentrated its stock market presence in European markets. This is all part of a strategy that seeks to strengthen the balance sheet, prioritize cash generation, and redirect investments towards higher growth businesses.
Relationship with trade unions and extension of agreements
The collective dismissal agreement was reached after several weeks of negotiations with the main labor unions, amidst public debate over the scale of the restructuring. The company emphasized that the process will be, as far as possible, voluntary and agreedMeanwhile, the unions have focused their efforts on improving economic conditions and reducing the risk of forced layoffs.
In the same package of agreements, Telefónica has confirmed the Extension of the collective agreements of the affected companies until December 31, 2030According to the operator, this will allow for maintaining a framework of job stability in the coming years, while the reorganization measures contemplated in the strategic plan are deployed.
The company maintains that, with these agreements and the redesign of its personnel structure, it will be able to continue focusing on attracting and retaining talent, invest in differential technological capabilities and consolidate new, more flexible and digital ways of workingbased on autonomy, individual responsibility, and contribution to results. In parallel, work will continue on simplify the operating model to reduce duplication and streamline decision-making.
For their part, the workers' organizations point out that the State, through its shareholding, has a significant role in the company's future and have demanded that Staff adjustments should be accompanied by retraining and redeployment plans.especially in areas with high technological demand. The debate about the importance of skilled jobs in the sector and the territorial impact of the workforce reduction plan remains open, particularly in the regions where Telefónica maintains large workplaces.
Telefónica's move is part of a broader trend among major European operators, who are looking to reduce your fixed costs to adapt to a mature, highly regulated market with strong competitive pressure, where traditional mobile voice and data revenues are growing with difficulty while investment needs in fiber and 5G networks remain high.
With this workforce reduction plan, the Spanish telecom company faces one of the most significant job cuts in its recent history, assuming a immediate disbursement of 2.500 billion euros in exchange for a structural reduction in expenses that, according to their forecasts, will begin to be noticeable in the cash flow from 2026 and will be consolidated in the form of annual savings of around 600 million euros from 2028All of this fits into the strategy of achieving a leaner, more digitized group with greater financial flexibility in the European telecommunications market.
