New Vodafone boss Margherita Della Valle said she would cut 11,000 jobs over three years to help the telecoms group regain its competitive edge after it warned that poor performance in its biggest market, Germany, would hit cash flow.

Shares in Vodafone, which has underperformed rivals in many of its major European markets, fell to their lowest level since early January and were trading down 4% by midmorning.

The job cuts are the biggest in the history of Vodafone, which employs 90,000 people directly across Europe and Africa.

Della Valle was mandated to turn Vodafone around when she permanently took on the top job from the role of CFO last month. She has three major investors on her shareholder register who could all benefit from a breakup of the group.

"To consistently deliver, Vodafone must change," she said. "My priorities are customers, simplicity and growth."

Della Valle started cutting jobs when she took the helm at the start of the year, targeting Vodafone's major operations in London. She told reporters that the new cuts would be spread across its markets and more reductions in the center.

Germany, Vodafone's biggest market, was underperforming, she added on Tuesday, while "structural change," meaning a full or partial sale, was an option in Spain.

Tuesday's share price fall was most likely down to its forecast of 3.3 billion euros ($3.6 billion) of cash flow this financial year, down from 4.8 billion euros in the year to the end of March 2023, she said. Analysts had expected 3.6 billion euros.

The CEO put the lower forecast down to the timing of payments for cable TV in Germany due to a change in the law.

Della Valle said Vodafone's dividend was a matter for the board but pointed to a "significant" cut in debt and said the group was comfortable with its leverage.

"The new CEO has decided to maintain its dividend (a missed opportunity in our view and a concern the company remains unwilling to take necessary bolder action)," analysts at JP Morgan Cazenove said.

Lagging rivals

Vodafone reported a 1.3% decline in group core earnings to 14.7 billion euros for the year, missing its own guidance.

Della Valle said the European telecoms market had long delivered a poor return on the capital invested in networks, but Vodafone's relative performance had worsened over time.

Activist investors and rivals have also described the British group as unwieldy and slow to respond to market changes.

Emirati telecoms firm Etisalat has built up a 14.6% Vodafone stake and French telecoms billionaire Xavier Niel competes with it in Italy. Liberty Global, its partner in the Netherlands, is also an investor.

Analysts have said all three are positioned for any sale of Vodafone's operations.

Setting out her roadmap, Della Valle said she would maximize the potential of business customers, a long-standing Vodafone strength, while focusing on the basics, such as customer service, for consumers.

Vodafone has already started to cut jobs in big markets, shedding 1,000 in Italy this year, while a media report said it was looking to cut around 1,300 in Germany.

Della Valle's predecessor Nick Read, who stepped down in December amid investor frustration, had said consolidation was needed in major markets like Britain, where Vodafone has been in talks with rival Hutchison's Three UK for at least nine months.

Vodafone said on Tuesday there could be no certainty that any transaction would ultimately be agreed.

"It will take as long as it takes to get a good deal," Della Valle told reporters.