By Andrea Figueras

Telefonica said that it had reached a collective bargaining agreement with unions to lay off up to 3,421 employees in Spain, following the company's restructuring plan.

The layoffs, which will cost around 1.3 billion euros ($1.42 billion) before taxes, will run until December 31, 2026, and can be extended for one additional year, the Spanish telecommunications company said on Wednesday.

Employee departures are estimated to take place in the first quarter of this year and those turning 56 years or older in 2024 who have been with the company for more than 15 years will be able to participate in the agreement, Telefonica said.

The layoffs will enable the company to reach average annual savings from direct expenses of some EUR285 million from 2025, although the impact on cash generation will be positive from this year.

Telefonica said that it and the unions have been negotiating the labor force adjustment plan, which follows the company's organizational, technical and production needs.

According to its 2022 annual report, Telefonica employed 20,947 people in its home market.

In December, the company proposed a workforce restructuring affecting 5,124 jobs in Spain, but the unions claimed that the number of jobs affected had to be significantly lower.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

January 04, 2024 01:50 ET (06:50 GMT)

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