New Vodafone boss Margherita Della Valle said on Tuesday she would cut 11,000 jobs over three years to simplify the telecoms group and regain its competitive edge as it forecast a 1.5 billion euro drop in free cash flow this year.
The job cuts are the biggest in the history of Vodafone, which employs around 100,000 people across Europe and Africa, making it one of Britain's best known corporate brands.
"Our performance has not been good enough," said Della Valle, who was appointed permanently as CEO last month, adding: "My priorities are customers, simplicity and growth".
Vodafone opened 4.5% lower, the biggest faller in the FTSE 100 and dropping to their lowest level since early January.
New CEO says Germany underperforming
Spanish business under strategic review
Sees 1.5 billion euro fall in free cash flow this year
Shares fall to a five month low
"Lacklustre performance has been something markets have come to expect from Vodafone of late, and full-year results didn’t buck the trend," said Matt Britzman, equity analyst at Hargreaves Lansdown.
Della Valle said Germany, Vodafone's biggest market, was underperforming, while Spain, which has suffered cut-throat competition in recent years, was under strategic review.
Underscoring the pressures on the business, Vodafone said it would generate 3.3 billion euros ($3.6 billion) of cash this financial year, down from 4.8 billion euros in the year to end-March 2023. Analysts had expected 3.6 billion euros.
For the year to end-March, pressures in Germany and higher energy costs resulted in a 1.3% decline in Vodafone's group core earnings to 14.7 billion euros, missing its own guidance.
Vodafone said the European telecoms market had long delivered a poor return on the capital invested in networks, and its relative performance had worsened over time.
Activist investors and rivals have also described the British group as unwieldy and slow to respond to market changes.
Della Valle said she would maximise the potential of business customers, a long-standing Vodafone strength, while focusing on the basics, such as customer service, in the consumer market.
Vodafone has already started to cut jobs in its big markets, shedding 1,000 in Italy earlier this year, while a media report said it was looking to cut around 1,300 in Germany.
Della Valle's predecessor Nick Read, who stepped down in December, had said consolidation was needed in major markets like Britain, where Vodafone has been in talks with rival Hutchison's Three UK for at least nine months.
But on Tuesday, Vodafone said there could be no certainty that any transaction would ultimately be agreed. It did not comment further on the talks.