Spanish telecoms group Telefonica said yesterday it had reached a deal with unions to lay off up to 3,421 employees in Spain in a plan it estimates will cost around €1.3 billion before taxes as it seeks to reduce costs, reports Reuters. In a statement to the stock regulator, Telefonica said the departures are expected to take place during the first quarter of 2024 after weeks of negotiations with unions. Employees turning 56 years or older in 2024 and with seniority of more than 15 years can participate in the agreement, the company said.

Telefonica said it estimates average annual savings from direct expenses of around €285 million from 2025 due to the layoffs and said the impact on cash generation will be positive from 2024. The announcement came as Telefonica said it had reached a new collective bargaining agreement with unions, running until 2026 and which could be extended for another year, with "the aim of moving towards a more digital, flexible and prepared company for future challenges in a highly competitive context". Telefonica, Spain's largest telecom, employs about 21,000 people in its home country, while the global workforce exceeds 103,000. The layoffs are part of the company's three-year strategic plan to boost profitability by reducing capital expenditure, raising revenue and cutting costs.