Telefonica reached an agreement with unions to lay off up to 3,421 employees in Spain following weeks of negotiations, a plan that will cost the company around €1.3 billion.

In a statement, Telefonica explained the lay-off process will be put into motion from as early as Q1 2024 and will allow workers turning 56 years or older in the current year with seniority of more than 15 years to be involved.

The deal with unions also includes a new collective bargaining agreement running until 2026 extendable for another year, with the aim of ensuring Telefonica moves “towards a more digital company, flexible and prepared for future challenges in a highly competitive and profoundly transformed context”.

Official confirmation of the cuts comes a month after Reuters reported Telefonica had informed unions it would cut a significantly higher sum of more than 5,000 jobs in Spain by 2026, although that figure was unconfirmed.

The company employs 103,000 employees globally, with 21,000 of its workforce based in its home market.

It estimates average annual savings from direct expenses of around €285 million from 2025 due to the cuts and the impact on cash generation will be positive from 2024.

The jobs cull is part of the company’s wider Growth, Profitability and Sustainability strategy which outlines its financial targets through to 2026. At the end of 2023, the government also announced plans to acquire a stake of up to 10 per cent in the operator.