Vodafone has vowed to head off the credit crunch at the pass after unveiling a pre-emptive restructuring programme in the wake of a 35% profit slump in the first half.
Newly-installed chief executive Vittorio Colao said he would reduce operating costs by around £1bn per annum by 2011 in an attempt to offset growing pressure from the macro-economic environment.
He also called a halt to Vodafone’s buy-and-build growth strategy, saying that while Vodafone would continue to “support consolidation” where appropriate, its focus would be realigned on its existing businesses and any future buys would need to be funded through portfolio disposals in other areas.
Vodafone maintained silence on the question of whether or not any jobs would be lost in the UK as a result of the cost-cutting moves, but Colao’s pronouncements were well received as Vodafone stock jumped on the announcement.
Overall, first half revenue was up 17.1% on the same period last year, hitting £19.9bn, although as stated profits fell 35% to £2.1bn.
Rallying his troops, Colao said: “We will pursue growth opportunities in total communications, specifically mobile data, enterprise and broadband. In our emerging markets, the priority will be execution and we intend to further strengthen capital discipline.”
He insisted Vodafone still had the “right assets and strategy” to continue to dominate the mobile industry.