New Vodafone boss says to slash costs by €1.2bn

The efficiency drive on Vodafone's European business, totalling the equivalent of $1.3 billion, is the first under newly-installed chief executive Nick Read.

Picture: AFP

LONDON – The new boss of Vodafone on Tuesday launched a new €1.2-billion cost-cutting plan, as the British mobile phone giant faced a heavy loss on the sale of Indian assets.

The efficiency drive on Vodafone's European business, totalling the equivalent of $1.3 billion, is the first under newly-installed chief executive Nick Read.

"We expect that the rapid adoption of digital technologies will enable us to reduce operating expenses in our European operations... by at least €1.2 billion by 2021, compared to 2018 levels," Read said in a results statement without specifying where exactly costs would be slashed.

Vodafone added that it sank into a net loss of almost 8.0 billion euros in the first half of its financial year - the six months to September.

That contrasted with profit after tax of €1.13 billion last time around. Sales slid 5.5% to €21.8 billion.

The poor performance was sparked partly by a €3.4-billion loss from the sale of Indian operations.

It also took a €3.5-billion write-down on the declining value of activities in India, Spain and Romania.

But the group's share price shot up seven percent to 154.9 pence on London's benchmark FTSE 100 index as investors focused on the group's improving debt levels.

"Reducing operating costs for a third consecutive year has helped earnings come in slightly ahead of prior expectations, while the group confirmed a marginally more upbeat outlook for the full year," said George Salmon, equity analyst at Hargreaves Lansdown.

Vodafone's Indian division in August merged with Idea Cellular to become the country's biggest mobile phone company with more than 400 million customers.

Read was upbeat over the first-half figures.

"Our performance in the majority of our markets has been good during the first half of the year," said Read, who took the reins in October after long-serving chief Vittorio Colao decided to step down.

"We have taken decisive commercial and operational actions to respond to challenging competitive conditions in Italy and Spain.

"We are on track to reduce net operating expenses for the third year running."