Telefónica, the Spanish telecommunications giant, is preparing to pay around 1.2 billion euros in compensation as part of its restructuring efforts. The company's financial director, Juan Azcue, emphasized that this year will see a significant peak in spending on severance payments to former employees, as the firm continues its negotiations regarding layoffs tied to its Employment Regulation Files (ERE). These payments, occurring over several years until employees reach about 63 years of age, will impact the company's financials, leading to losses for the third consecutive year.

The ongoing restructuring involves approximately 5,500 job cuts, and the company has set aside a provision of 2.5 billion euros to cover these severance costs. Although the immediate financial burden is significant, Telefónica anticipates that by 2027, when these payments are factored into dividends, the shift in financial weighting will result in reduced overall impact. The upcoming years are poised to be critical as the company navigates these challenges while attempting to stabilize its financial situation.

As the telecommunications industry faces increasing competition and economic pressures, Telefónica's handling of this compensation and layoff process will be closely watched. Stakeholders are particularly interested in how these decisions will affect the company's long-term prospects and market position amid changing regulatory and economic landscapes in Spain and beyond.