STOCKHOLM (dpa-AFX) - Swedish telecom firm Telia Co. (0H6X.L, TLSNY.PK) announced a restructuring program, including planned reduction in its headcount by 3,000 positions, which would result in annual savings of at least 2.6 billion Swedish Kronor.
Separately, the company said it is restructuring its vendor financing program and reduces its volume by approximately 50% during the second half of fiscal 2024. The move would help the firm drive simplification, reduce cash flow volatility and increase balance sheet transparency.
Telia said the cost savings program is set to improve customer focus by strengthening country units with additional capabilities for faster decision-making and improved commercial execution, while reducing layers of organizational complexity.
Subject to union negotiations, Telia aims to reduce its headcount by 3,000 positions during 2024, including both employees and resource consultants, impacting all units across the company. As of December 31, Telia had around 18,000 employees and 1,370 resource consultants. Year-to-date, Telia has reduced its headcount by 455 positions, and aims to make the remaining reductions by December 1.
The program is expected to result in restructuring charges of approximately 1.4 billion kronor in the second half. The company noted that estimated restructuring charges are not expected to impact its financial outlook statements for 2024.
As part of the program, Telia plans to streamline and reshape its organizational structure to equip its country units with additional capabilities transferred from the current Common Products & Services or CPS and Group Strategy & Commercial or GSC organizations.
After the intended transfer of competence to country units, the remaining part of the common technology and product unit would retain expertise in IT, networks and product management, allowing Telia to continue to benefit from economies of scale where relevant.
Patrik Hofbauer, Telia Company President and CEO, said, 'This is a tough decision, but one that is necessary to ensure the long-term success of Telia. Together with the Board and my leadership team, we are set to eliminate barriers to execution and reduce layers of organizational complexity so that we can better serve our customers. I envisage that this intended approach will not only result in a Telia that is simpler and faster in decision-making and commercial execution, but also help us to grow our business and generate enough cash so that we can make necessary investments and cover our dividend...'
Further, regarding the vendor financing program, the company noted that accounts payable under vendor financing arrangements were 11.5 billion kronor per December 31, 2023. Following the restructuring, it is expected to be approximately 50% lower by December 31, 2024.
The restructuring is estimated to result in reduced cash flow volatility over time and to have limited effects on net profit.
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