Vodafone eyes annual savings of £2.5bn

Squeeeeze the suppliers

Vodafone is to cut costs by £2.5bn per year by March 2008. It will do this a combination of £1.4bn through cost-saving measures and £1.1bn through revenue initiatives.

The mobile network operator will exploit its size to buy in bulk, and will generate additional revenue by eliminating duplicated effort. In other words, the handset makers and network equipment vendors are in for years of tough negotiations.

The company told analysts and investors today that it will employ a "build once, deploy many times" development strategy to reduce time-to-market on new services. It aims to reduce mobile capital expediture to less than 10 per cent of mobile revenue by 2008.

Arun Sarin, chief executive, reiterated guidance for the financial year, saying that he expected to generate £7bn in free cash flow, this year. Some of this will go into increasing dividend payments - more information is promised in November to accompany the publication of half-yearly results.

The money will also come in useful for acquisitions: Voda remains interested in acquisitions in France, eastern Europe, Asia and Africa, Sarin said. ®

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Related link

Vodafone's last annual report is here (pdf).

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