Almost 1,000 layoffs in four months: the latest alarm signal from some ‘telecoms’ in a critical situation

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Vodafone announced this Wednesday a new ERE that will affect a maximum of 515 employees, 12% of its workforce. It is the second file of employment regulation of the operator in three years after in 2018 will settle the departure of another 916 people. In this period, it has gone from 5,165 employees to 3,734 after this latest announcement.

The ERE of Vodafone joins the one announced in May by Orange, its main rival, in which it aimed at the exit of another 400 people, just over 10% of the 3,000 employees of Orange Spain. The operator has about 5,700 workers in Spain, including own stores and platforms.

In 2019, Telefónica agreed on a Individual Employment Suspension Plan (PSI) which included 2,636 employees in Spain, those who will receive 68% of the gross salary. This meant reducing the active workforce of the operator to the current 19,000 employees of the companies Telefónica de España, Telefónica Móviles and Telefónica Soluciones.

If only EREs are included, there are at least 900 casualties in four months, which rise to 3,500 if Telefónica’s agreed departures since 2019 are included. In short, a job loss never seen in the recent history of the sector and a new proof that we are facing a sector that needs urgent changes to ensure its survival.

A job destruction that is the consequence of an exhausted, low-cost, deflationary model that has led the sector to significantly reduce its income and to put at risk the important investment in digitization facing industrial operators.

Drop in income

An environment favored by the regulator, CNMC, which has turned a blind eye to the proliferation of dozens of brands and offers that have done nothing but destroy value. Competence it ensures that there are as many players as possible in the market, which has caused the sector to devalue and enter a deep crisis.

We are talking about a strategic sector, but deflationary, and with a negative profitability. A context of enormous pressure and competitive intensity in prices that affects a low market value causing a very significant drop in income in recent years.

The data is revealing: the sector has lost 30% of retail revenue in ten years, the loss in value of the telecommunications sector in five years has been 45%, 60% of the new line additions in the sector occur in the segment low-end and the main operators (Telefónica, Orange and Vodafone) have lost approximately 600,000 customers since January, 2,460 customers every day.

Not even the manna of European funds and the promises of the first vice president Nadia Calvin from approving a rescue package for the sector have brought calm to some companies that see the next few months as they are decisive for the survival of your accounts.

This dynamic of value migration has serious implications for the development of critical infrastructures for the country, since the industrial operators that are expected to face the risk of the new investment cycle are those with the worst starting point and the longest prospects. complex in terms of profitability, so they are in a weak position to invest.

Faced with this situation, all voices call for consolidation in the sector. In fact, the latest operations are in this line after the purchase of Euskaltel by MásMóvil for 2,000 million euros plus debt.

The problem is that, with the existing regulation, there will always be a fourth operator that, benefited by the remedies After the integration of the consolidated parties, it will restart the machinery to shake up the market and return to the starting box. So it happened with Ono, Jazztel and MásMóvil.

To do? The sources consulted by this newspaper insist that operators must change, evolve their business model, enter new businesses and seek profitability again to grow in a sustainable and healthy way to invest.

New operators

On the other hand, the sector is already beginning to talk about the fact that the large players digital like Amazon, Netflix, Twitter o Facebook start paying to use the networks of these companies with an industrial vocation. An interesting example is what has happened in South Korea, where aware of the situation the regulator has forced Netflix to pay for the use of the network.

But these efforts, like the plan of the government to improve the taxation of telecommunications operators in Spain, they would be useless if there is not a willingness of the entire sector to stop the trade war and low cost. If this decision is not made soon, There will be no money for networks or for 5G and the digitization demanded by the Spanish economy will remain half.

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