Spanish Business News

Telefonica SA (TEF) may cut its workforce in Spain by about 20 percent within the next three years as the country’s former phone monopoly targets growth in Latin America to make up for declining sales in its home market.

Telefonica, which employs about 35,000 people in Spain, faces a “difficult” macro-economic environment and “increased competitive pressure,” the company said in a presentation on its website today. Madrid-based Telefonica, which is cutting 6 percent of manager positions, said it will link pay and benefits more to employees’ productivity rather than the consumer price index.

The operator is betting on higher dividends and Latin America’s rapid growth to win back investors discouraged by the Spanish government’s austerity measures and the highest unemployment rate in the euro region. Chairman and Chief Executive Officer Cesar Alierta raised his bid three times last year to convince Portugal Telecom SGPS SA (PTC) to sell its part of their venture that controlled Brazilian wireless operator Vivo Participacoes SA. (VIVO4)

“The potential cut in workforce of up to 20 percent is greater than we expected and the move to realign salaries to productivity and away from CPI is encouraging,” Guy Peddy, an analyst at Macquarie Securities in London, said by e-mail today. “The aim to sustain margins is also more robust than we expected.”

Read the rest of the srticle at Bloomberg.com