Banc Sabadell | Telefónica (TEF) has communicated this week the agreement for the execution of the planned redundancy proceedings for its subsidiaries in Spain, which will finally affect 3,421 employees (~16% of the employees in Spain, ~3% of the Group), in line with what was already known. In the statement, Telefónica indicates that the present value of the costs associated with the plan has resulted in a provision of close on €1.3 billion (~3% of Group revenues), with no impact on cash. In addition, Telefónica estimates that the direct cost savings from 2025 onwards will be €285 million, and that in any case the impact on cash generation will be positive from 2024 onwards.
Assessment: Positive news with limited impact, insofar as the cost associated with the redundancy proceedings is -18% below what we had calculated based on the average cost per employee in the mass layoffs similar to the last Individual Separation Plan. We also have a positive assessment of the final direct cost savings figure, which represents close on 48% of the €600 million of cost savings announced in the strategic plan of November 2023.
