Telefónica(US:TEF) Xin Lang Cai Jing·2025-12-29 05:34Core Viewpoint - Telefónica SA is undergoing a significant restructuring, planning to allocate €2.5 billion (approximately $2.9 billion) for severance payments to around 5,500 employees, representing a layoff rate of 20% to 24% of its workforce, marking one of the most aggressive cost-cutting measures in the European telecom industry in recent years [2][4] Group 1: Company Actions - The severance package aims to save approximately €600 million in operational costs annually starting from 2028, allowing the company to recoup its investment in just over four years [2][4] - The average severance payment per employee is about €455,000 (approximately 3.7 million RMB), significantly exceeding standard compensation levels [2][4] - The layoffs are part of a collective dismissal process that requires agreements with labor unions, which typically demand better-than-legal compensation to facilitate voluntary departures [4] Group 2: Industry Context - The layoffs at Telefónica reflect broader trends in the European telecom sector, where companies like BT, Deutsche Telekom, Verizon, and AT&T have also implemented significant workforce reductions due to stagnant revenue growth and the need for cost-cutting [3][5] - The telecom industry is facing multiple pressures, including long return cycles on 5G investments, shrinking traditional business models, and intensified market competition, leading to widespread layoffs as a cost-reduction strategy [3][5] - The high severance payments indicate that many of the affected employees are long-tenured and high-salaried, suggesting a strategy to rejuvenate the workforce by incentivizing early retirement and voluntary departures [4]