Job cuts loom at Vodafone as the mobile operator this morning reported a sudden drop in revenues from its UK business and announced that it is to double-up its cost-cutting programme from what was widely seen as an ambitious £1 billion to an even more ambitious £2 billion over the next two years. It means more redundancies will be all but inevitable. Martyn Warwick reports.
Vodafone is playing down the likely job losses. A spokesperson said, "There will be some implications for jobs but that will not be the focus. The emphasis is around technology." The cost reduction regime will focus on "procurement" and "cutting back on network equipment" - a strange thing for one of the world's biggest mobile operators to contemplate.
Vodafone's figures for the half-year to September 30 show that although "interim pre-tax profits" grew by 3.6 per cent to £5.48 billion, revenues fell back by 3 per cent to £21.8 billion.
Pre-Ebitda earnings for the group fell by 8 per cent overall and the biggest drop, at 5.7 per cent, was registered in Vodafone's home market, Britain.
The Stock Market reacted quickly and Vodafone shares fell by three pence (that's 2.17 per cent) to 134.95 in early trading. The company was once the market leader in the UK but is now sliding down the rankings. It is currently Number Two behind O2, but will fall again, to a humiliating third place, when the upcoming Orange/Deutsche Telekom alliance is in place.
In a statement, Vodafone says, "In Europe organic service revenue declined 4.5 per cent reflecting the economic and competitive environment, with 17.8 percent more mobile data revenues and 7.3 percent more fixed line revenues are still being offset by ongoing price pressures."
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