In Short:
Sweden’s Telia plans to cut around 15% of its workforce, equating to about 3,000 jobs, to save 2.6 billion Swedish crowns ($253 million). CEO Patrik Hofbauer stated this difficult decision aims to secure the company’s future, as they face declining ad sales amid inflation. The layoffs will be completed by December 1, with a focus on streamlining operations and enhancing accountability.
By Supantha Mukherjee and Stine Jacobsen
Telia’s Workforce Reduction Plan
Telia, Sweden’s leading telecom operator, has announced plans to reduce approximately 15% of its workforce as part of an initiative to cut annual costs by 2.6 billion Swedish crowns (equivalent to $253 million). This decision was communicated on Wednesday and reflects the company’s ongoing efforts to adapt to challenging market conditions.
Impact of Advertising and Economic Pressures
The company, which provides telecom services and operates television channels across the Nordic and Baltic regions, has been facing difficulties attributed to declining advertising revenues in its media segment. These challenges have been exacerbated by inflation, prompting many companies to tighten their advertising budgets.
CEO’s Statement on the Decision
CEO Patrik Hofbauer acknowledged the gravity of these decisions, stating, “This is a tough decision, but one that is necessary to ensure the long-term success of Telia.” The workforce reduction will involve around 1,400 job cuts in Sweden, with the remaining reductions distributed among other countries.
Company Structure and Future Plans
With a total employee base of about 18,000 and an additional 1,370 consultants, Telia aims to finalize these layoffs by December 1. This move is part of a broader, multi-year restructuring strategy that the company initiated in 2021 to reduce costs through 2025 via annual layoffs, asset divestitures, and operational streamlining to foster growth.
In terms of operational strategy, Hofbauer emphasized the need for simplification in operations and expedited decision-making processes. He remarked, “We need to be much more simpler in the way we operate, faster on decision making, and also when it comes to commercial execution, and we need to create more margin.”
Looking Ahead
Hofbauer expressed plans to unveil a three-year strategy during Telia’s Capital Market Day scheduled for September 26. He affirmed the shift towards a more decentralized operating model that grants increased responsibility and accountability to country-level operations, recognizing the importance of direct engagement with customers.
Industry Analyst Insights
According to Mads Lindegaard Rosendal, an analyst at Danske Bank Credit Research, the reduction of 15% in headcount represents one of the significant cost-saving initiatives witnessed in the telecom industry and aligns naturally with the recent change in the CEO position.
