Swedish telecom giant Telia Co. (0H6X.L, TLSNY.PK) has unveiled a restructuring initiative that includes a significant workforce reduction of 3,000 positions, aiming to achieve annual savings of at least 2.6 billion Swedish Kronor.
Separately, the company announced changes to its vendor financing program, intending to cut the volume by approximately 50% during the latter half of fiscal 2024. This adjustment is expected to simplify operations, reduce cash flow volatility, and enhance balance sheet transparency.
The cost-saving measures are designed to bolster customer focus by empowering country units with greater capabilities for quicker decision-making and more effective commercial execution, while also minimizing organizational complexity.
Pending union negotiations, Telia plans to reduce its workforce by 3,000 roles in 2024, affecting both employees and resource consultants across all divisions. As of December 31, Telia employed around 18,000 staff and 1,370 resource consultants. Year-to-date, the company has already cut 455 positions, with the goal of completing the remaining reductions by December 1.
The restructuring program is projected to incur charges of about 1.4 billion kronor in the second half of the fiscal year. However, Telia stated that these estimated restructuring charges would not impact its financial outlook for 2024.
As part of this initiative, Telia intends to streamline and reshape its organizational framework, allocating additional capabilities from its existing Common Products & Services (CPS) and Group Strategy & Commercial (GSC) organizations to its country units.
After these capabilities are transferred to the country units, the remaining common technology and product unit will continue to maintain expertise in IT, networks, and product management, allowing the company to leverage economies of scale where applicable.
Patrik Hofbauer, Telia Company President and CEO, remarked, "This is a difficult but necessary decision to secure Telia's long-term success. Together with the Board and my leadership team, we are committed to removing barriers to execution and reducing organizational complexity to better serve our customers. I believe this approach will not only make Telia more agile in decision-making and commercial execution but also help us grow our business and generate sufficient cash flow to invest where needed and sustain our dividend..."
Additionally, regarding the vendor financing program, Telia reported that accounts payable under these arrangements totaled 11.5 billion kronor as of December 31, 2023. Following the restructuring, this figure is expected to be reduced by approximately 50% by December 31, 2024.
The restructuring is anticipated to result in decreased cash flow volatility over time and to have a minimal impact on net profit.
