Vodafone has made it painfully clear that it will do whatever it can to squeeze the handset makers, and get savings and use them to reduce their own costs.
This will come from its One Vodafone plan, which should produce cost savings of £1.4bn and extra revenues of £1.1bn. This includes such strategies as reinforcing branding, applying local successes worldwide across the group and putting extra pressure on handset and equipment makers.
This is not good news for companies like Nokia. Speaking with Wall Street analysts today, Vodafone chief executive Arun Sarin said that world’s largest wireless company expects to produce an extra £2.5bn a year in free cashflow by 2005. ‘The mindset of the board is to pay out a greater fraction of the free cashflow we generate. We will pay out more and more of cashflow in the coming years,” Sarin said.