The operator that connected Spain for decades now faces its most difficult disconnection: the internal one

Telefónica, a major telecommunications operator in Spain, is implementing a significant restructuring plan that includes a workforce reduction through an Employment Regulation Record (ERE). The ERE, communicated to unions, will initially affect between 6,000 and 7,000 employees, representing 24% to 28% of the Spanish workforce, although the final number could be around 4,000 after negotiations. This move highlights the challenges faced by telecommunications companies in a changing digital landscape. The workforce reduction reflects the changing dynamics of the telecommunications sector. Telefónica, which had 67,000 employees in 1997 when it was a public monopoly, will be left with approximately 18,000 employees, a reduction of over 70% in three decades. The company is investing heavily in 5G infrastructure, fiber optics, and advanced networks while facing pressure on pricing. This restructuring has significant implications for both the company and the broader market. The Spanish government, holding a 10% stake in Telefónica, is indirectly financing the layoffs through the 'Cláusula Telefónica,' which requires the company to reimburse unemployment benefits. The company aims to save between 300 and 500 million euros annually based on the final agreement and aims to cut operational costs by 3,000 million by 2030. Telefónica's situation underscores the difficulties faced by traditional telecommunications companies in adapting to the digital era. The company's debt, close to 30 billion euros, and its undervalued stock further complicate matters.