Vodafone (NYSE: VOD) will save £1 billion ($1.67 billion) in cost savings by March next year, one year ahead of schedule, and CEO Vittorio Colao now pledges that a further £1 billion will be lopped off the company’s outgoings by 2012 so it can re-invest in revenue growth. The company says in its earnings release for the first half of 2009 that the cuts are designed to “offset the pressures of the competitive environment”. No word on whether jobs will be culled, but the company is seeking “efficiencies” in call centres and through outsourcing which doesn’t sound like great news for staff.
— Earnings: For the six months to September 30, revenue rose 9.3 percent on H108 to £21.76 billion ($36.46 billion) — but that’s down three percent at constant currencies — and operating profit was up 3.6 percent to £5.48 billion ($9.18 billion). The company confirms its earlier full-year profit forecast, in the region of £11 billion ($18.4 billion) to £11.8 billion ($19.77 billion), and it added 9,600 customers in Q209, giving it a total of 303,000.
— Europe: In Voda’s most competitive market, revenue fell 5.1 percent at constant currencies to £14.9 billion ($24.9 billion). The company puts voice revenue declines down to market and regulatory price pressures. EBITDA was down eight percent at £5.6 billion ($9.3 billion). UK revenue was was down 18.4 percent to £583 million ($901 million). In Q209 Voda lost 131,000 net European customers.
— Asia, Pacific, Middle East: In emerging markets, led by unstoppable growth in India, Voda’s revenue rose 11.3 percent at constant currencies to £3.07 billion — helped by a massive 48.2 percent customer increase. Colao cautioned in the analysts’ call that “competition has intensified recently” in India, with 12 “aggressive” competitors going toe-to-toe, but he still predicts an average of five percent growth in the entire market there in the next five years. 8,265 or 85.4 percent of Vodafone’s entire net customer additions came from these markets.
— Update: In the conference call, Colao didn’t rule out further job cuts at Vodafone, but told analysts “our cost efficiency programme is not about headcount merely” and said “I would not expect big announcements of big headcount (reductions)”. Instead, rationalising assets like property will make up the lion’s share.
Colao also added his voice to the European operators calling for consolidation in India and said it was now a question of “when not whether” the Indian government announces plans that would allow the market to shink. “I don’t think anyone thinks there will be 12 operators in India — in some areas most people think there will be two or three.”
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