The management of the giant Spanish telecommunications company Telefónica announced on Wednesday that it has reached an agreement with unions that foresees the dismissal of up to 3,421 workers in Spain, as part of a project to reduce its operating costs.

The staff reductions will take place during the first quarter of 2024 and will mainly concern employees aged 56 and over who have been with the company for at least 15 years, Telefónica management explained in a press release.

The former state monopoly estimates the layoffs plan will cost it around €1.3bn before tax and deliver annual cost savings averaging €285m a year from 2025.

The largest company in the telecommunications sector in Spain currently employs approximately 16,500 workers in its country, while on a global scale its staff exceeds 100,000 people.

It is present in 12 countries, including Brazil, Britain and Germany.

Telefónica also announced yesterday the conclusion of a new collective labor agreement with the unions, valid until 2026, which may be extended for an additional year, as part of its “digital transformation” to become “more flexible and prepared for future challenges” ” in the highly “competitive” environment in “deep realignment”.

Other European telecoms companies (BT, Vodafone) have also announced job cuts this year as they face increasingly tough competition in the market with ever-lower prices and try to adapt as new technologies such as those linked to artificial intelligence emerge.

Like other European companies in the industry, Telefónica is heavily indebted, in part because of the cost of building a national fiber optic network and setting up a fifth-generation (5G) high-speed network for mobile devices.