Vodafone Spain could cut up to a quarter of staff

MADRID Mon Jan 14, 2013 6:55am EST

MADRID Jan 14 (Reuters) - Vodafone may slash its workforce in Spain by up to a quarter as it fights an escalating price war in a shrinking market while the country goes through its worst economic crisis in decades.

The British company wrote down the value of its businesses in Spain and Italy by 5.9 billion pounds ($9.5 billion) in November. The firm said service revenue in Spain declined 11 percent year-on-year in the six months to end-Sept, due to macroeconomic weakness and high unemployment.

Vodafone did not give details of how many workers could be dismissed. It will begin negotiations with labour unions on Tuesday.

A union source said Vodafone could cut around a quarter of Vodafone's 4,300-strong workforce, although the company has not given any official figures to unions.

"We managed to avoid lay-offs last year by agreeing to work suspensions and salary cuts, but now everything is pointing to them wanting to fire close to 1,000 workers," the union source said.

A price war has heated up between mobile operators in Spain in recent months, as cash-strapped customers ditch their mobile phones in record numbers and some switch to cheaper virtual operators.

Biggest players Telefonica and Vodafone have fared worst from the trend. Vodafone lost 278,000 mobile customers in October.

Former monopoly Telefonica said in 2011 it would cut 6,500 jobs from its domestic workforce over three years.

Many companies in Spain are laying off workers to save costs as consumer confidence plummets, drying up profits in the country, where one in four of the workforce is jobless.

Airline Iberia is currently locked in negotiations with unions over plans to cut 4,500 jobs.