Vodafone to deliver £1 billion cost reduction plan a year early

In its financial report for the last six months, Vodafone chief executive, Vittorio Colao, stated that the business will be delivered one year ahead of plan. In addition, Colao said the plan has been extended to include a further £1 billion of cost savings by 2012.

Colao commented: “The £1 billion cost reduction programme is expected to be delivered a year ahead of plan and we have extended this to a further £1 billion of cost savings by 2012. At the same time, we have maintained our capital investment at £2.6 billion in the first half, delivering further improvements in network quality and performance for our customers.”

He added: “The Group has performed in line with our expectations and we have made strong progress with our strategic priorities, in particular in mobile data and cash generation. We have confirmed our guidance for the full year, despite the uncertainties of current economic trends. We have continued to develop innovative services for businesses and consumers, such as Vodafone One Net and Vodafone 360, and to expand our fixed line services. We will continue our focus on the delivery of our growth strategy, particularly in data services.”

The six month report, ended 30 September, showed that Vodafone made group revenue of £21.8 billion, an increase of 9.3%; organic growth was down 3%.

In Europe revenue was up 3%, benefiting from foreign exchange, while in Africa and Central Europe revenue growth hit 35.9% including the acquisition of Vodacom. For Asia Pacific and Middle East revenue grew 15.9%, reflecting the performance in India.

Group data revenue was up 35.2% to £1.9 billion, while the Group adjusted operating profit was up 2.4% to £5.9 billion. Group EBITDA increased by 2.9% to £7.5 billion.

Free cash flow before licence and spectrum payments is at £4.0 billion, up 29.1%, while cash generated by operations was £7.6 billion, up 6.1%.