Spanish telco giant Telefónica SA is preparing to unveil a sweeping redundancy programme affecting more than 6,000 workers before year-end, marking the telecommunications company's most extensive workforce reduction in recent memory and underscoring its accelerating withdrawal from Latin American markets outside Brazil, Spanish business outlet Expansion reported.

The Madrid-based operator plans to extend the cuts beyond its traditional Spanish operating units to encompass subsidiaries including Telefónica Tech, Movistar+, and its corporate centre, according to people familiar with the matter cited by Expansion. The initial target could reach as many as 7,000 positions from a pool of approximately 25,000 employees, though negotiations with unions typically reduce final figures.

A Telefónica spokesperson said the company "is working on numerous analyses across all areas of the company, but a redundancy plan is not on the table at this time."

The redundancy scheme forms a critical component of Chief Executive Marc Murtra's strategy to reshape Telefónica into a consolidated European and Brazilian operator whilst divesting Spanish-speaking Latin American assets. The company has already agreed to sell its Argentine and Uruguayan operations and is exploring potential disposals in Chile, Mexico, and Ecuador, moves that could generate up to €3.6bn in proceeds, according to Kepler analysts.

The implications for Latin America are stark. Telefónica's retreat from the region, excluding Brazil, where it remains the largest telecommunication firm under the Vivo brand and seeks growth opportunities, represents a fundamental reassessment of markets that once formed a cornerstone of its international expansion strategy.

The company's first-half results laid bare the financial toll of its Latin American exit, with discontinued operations from sold subsidiaries contributing to a €1.35bn loss. Management appears intent on concentrating these painful adjustments into the 2025 financial year, allowing 2026 to benefit from reduced labour costs without further extraordinary charges.

By charging redundancy provisions to 2025 alongside Latin American disposal costs, Telefónica aims to quarantine the financial impact in a single year already marked by substantial losses. The accounting provision for the workforce reduction is expected to exceed the €1.3bn recorded during the company's 2023 redundancy exercise, which affected 3,421 workers and yielded annual savings of €285mn.

Murtra has articulated a vision centred on consolidating Europe's fragmented telecommunications market, which he argues features 41 companies serving more than 500,000 mobile customers each—compared with just five such operators in the United States. Speaking to Reuters in September, Murtra stated that the company is looking to acquire telecom assets in Europe and Brazil whilst selling off its Spanish-speaking Latin American assets.

The strategy seeks to maintain Telefónica's investment-grade credit rating whilst achieving the scale necessary to compete in capital-intensive sectors including cybersecurity and data centres. Potential acquisition targets could include Vodafone's Spanish operations, a merger with German operator 1&1, or Brazilian telecommunications properties.

The company intends to communicate the plan to union representatives following its November 4 strategic plan presentation, likely between mid-November and early December. Spanish labour regulations require 15 days to establish negotiating committees after official notification, followed by 30 calendar days for reaching agreements with employee representatives.