Vodafone could cut staff at its Spanish unit by around 25 percent as it responds to an escalating price war and shrinking market during Spain’s worst economic crisis for decades.

A union source told Reuters that the UK-headquartered company could reduce its 4,300-strong workforce by a quarter, although the company has not given any official figures to the union.

Vodafone told the publication it would begin negotiations with labour unions today but did not say how many jobs will go.

The union source said redundancies were avoided in 2012 through work suspensions and salary cuts but it now looks like close to 1,000 workers will lose their jobs.

Vodafone wrote down the value of its operations in Spain and Italy by £5.9 billion in November, saying that service revenue in Spain for the six months ending in September 2012 declined 11 percent year-on-year due to macroeconomic weakness and high unemployment.

Many consumers in Spain have moved to cheaper virtual mobile operators in recent months with Vodafone losing 278,000 mobile customers in October. The trend has sparked a price war between operators.