Vodafone Group chief Vittorio Colao, who had just started as chief executive this time last year, is already saying he wants to save another £1 billion. He says that the new cost-saving target should not result in big job losses. Instead, he expects to save money in areas such as technology, network consolidation and logistics.
But clearly one would imagine there are going to be some more redundancies necessary to hit such an aggressive target. The former McKinsey management consultant has proved a shrewd cost cutter, announcing this week that Vodafone will deliver the first £1 billion by March 2010, a year ahead of schedule.
And he says he wants to save the next £1 billion by 2012, although I suspect he’ll be pushing Vodafone executives extremely hard to beat that target too.
The urgency with which Colao wants to carry out this radical surgery reflects a number of negative trends in Vodafone’s latest half-year results. These trends are concerning to some of the company’s long-suffering shareholders, and that includes many Vodafone staff of course.
The company is growing its underlying profits but its underlying revenues fell by three per cent in the first six months of its financial year to £21.8 billion. Now, it’s well known that revenues are under pressure in Europe, particularly at Vodafone UK (more of which later).
But what is more alarming is that the company’s attempt to offset that decline by investing in less mature markets does not appear to be paying off terribly well right now.
Most worrying was Vodafone’s performance in India, the country that Colao’s predecessor Arun Sarin expanded the company into with the blockbuster acquisition of Hutchison Essar.
Full article in Mobile News issue 452 (November 16, 2009).
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