[ 2009-11-08 ]

Phone giant Vodafone UK eyes more cuts
London (UK) – 08 November 2009 – The Sunday Times – One of
Britain’s flagship telecoms companies, Vodafone, will this
week announce deeper cost cutting to compensate for sluggish
sales growth.
Alongside half-year results, Vodafone is expected to
increase savings targets from £1 billion.
Vittorio Colao, Vodafone’s chief executive, believes he can
squeeze at least another £500m from the cost base. He will
also warn on Tuesday that a bruising price war in India is
harming the group’s once-explosive growth prospects on the
subcontinent. New entrants including Tata have slashed
prices to seize market share and Vodafone has been forced to
retaliate.
India has been crucial in offsetting the sales declines that
Vodafone is still suffering in Europe. Terence Sinclair, a
telecoms analyst at Citi, calculates that India represents
15% of Vodafone’s profit growth. Colao is expected to warn
that the 23% sales increase enjoyed last quarter in India is
unlikely to be repeated in the short term.
To make matters worse, Vodafone has been given until
November 16 by the Indian tax authorities to explain why it
has not settled a $2 billion (£1.2 billion) tax bill left
over from the $11.2 billion acquisition that gained it entry
to the country in 2007. Vodafone argues that it was an
offshore deal and is likely to request an extension to the
deadline.
The company forecast in May that operating profits would be
at best flat this year, when Colao set a range of between
£11 billion and £11.8 billion.

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