Vodafone to cut 375 UK jobs as part of cost savings
Tuesday, 09 March 2010 14:23
Vodafone Group PLC, the world's biggest mobile operator by sales, said Tuesday that it will cut 375 jobs in the U.K. from March as part of wider efforts to save money during the economic downturn.
Vodafone, which has around 9,000 staff in the U.K., said "the roles affected are in a number of areas, across a number of locations, primarily in back office functions."
It also cautioned that there will "also be additional changes as further efficiencies and natural attrition in these functions take effect."
However, U.K.-based Vodafone will also hire 170 people in "customer facing roles," aimed at improving its services, and will select 50 graduates to start in September from over 3,000 who have applied to its U.K. graduate program.
The move comes a month after Vodafone increased its free cash-flow target as fiscal third-quarter revenue growth beat expectations and service revenue in Europe showed some signs of stabilization. Vodafone raised its free cash-flow range by GBP500 million to between GBP6.5 billion and GBP7 billion.
In November, Vodafone doubled its target for cost savings to help combat sluggish demand amid the economic downturn. At the time, Chief Executive Officer Vittorio Colao said the company's GBP1 billion cost-reduction program would be delivered a year ahead of plan and expanded by GBP1 billion by 2012.
Colao said the additional GBP1 billion of cost savings would come from technology, commercial and general and administrative operations, resulting in job cuts. He didn't provide further details.
Vodafone cut 500 U.K. jobs in February 2009.
Since taking the reins of Vodafone in July 2008, Colao has focused on generating cash and increasing shareholder returns by developing the firm's high-growth operations in Asia, Africa and Central Europe. He also has halted the company's expansion in emerging markets such as India and Turkey, a key strategy of former CEO Arun Sarin.
Vodafone has 70,000-plus staff across 31 countries.
The latest round of U.K. job cuts isn't surprising, with more likely, first in Germany and then Italy, Sanford Bernstein analyst Robin Bienenstock said.
"I'd like to see more of them, I like them," he said, noting that Vodafone could reduce its costs in Germany by 15% to 20%.
"It's stunning to me that Deutsche Telekom is able to cut costs more than Vodafone in Germany, that's a little surprising, and there's probably a little bit they could do in Italy as well," said Bienenstock, who has an outperform rating on Vodafone and a 180 pence target price.
A Vodafone spokesman declined to comment on the likelihood of more job cuts.
At 0917 GMT, Vodafone shares were up 0.5% at 149 pence, valuing the company at GBP78.32 billion, in a lower London market.
(Source: Total Telecom)
Vodafone, which has around 9,000 staff in the U.K., said "the roles affected are in a number of areas, across a number of locations, primarily in back office functions."
It also cautioned that there will "also be additional changes as further efficiencies and natural attrition in these functions take effect."
However, U.K.-based Vodafone will also hire 170 people in "customer facing roles," aimed at improving its services, and will select 50 graduates to start in September from over 3,000 who have applied to its U.K. graduate program.
The move comes a month after Vodafone increased its free cash-flow target as fiscal third-quarter revenue growth beat expectations and service revenue in Europe showed some signs of stabilization. Vodafone raised its free cash-flow range by GBP500 million to between GBP6.5 billion and GBP7 billion.
In November, Vodafone doubled its target for cost savings to help combat sluggish demand amid the economic downturn. At the time, Chief Executive Officer Vittorio Colao said the company's GBP1 billion cost-reduction program would be delivered a year ahead of plan and expanded by GBP1 billion by 2012.
Colao said the additional GBP1 billion of cost savings would come from technology, commercial and general and administrative operations, resulting in job cuts. He didn't provide further details.
Vodafone cut 500 U.K. jobs in February 2009.
Since taking the reins of Vodafone in July 2008, Colao has focused on generating cash and increasing shareholder returns by developing the firm's high-growth operations in Asia, Africa and Central Europe. He also has halted the company's expansion in emerging markets such as India and Turkey, a key strategy of former CEO Arun Sarin.
Vodafone has 70,000-plus staff across 31 countries.
The latest round of U.K. job cuts isn't surprising, with more likely, first in Germany and then Italy, Sanford Bernstein analyst Robin Bienenstock said.
"I'd like to see more of them, I like them," he said, noting that Vodafone could reduce its costs in Germany by 15% to 20%.
"It's stunning to me that Deutsche Telekom is able to cut costs more than Vodafone in Germany, that's a little surprising, and there's probably a little bit they could do in Italy as well," said Bienenstock, who has an outperform rating on Vodafone and a 180 pence target price.
A Vodafone spokesman declined to comment on the likelihood of more job cuts.
At 0917 GMT, Vodafone shares were up 0.5% at 149 pence, valuing the company at GBP78.32 billion, in a lower London market.
(Source: Total Telecom)
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