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Vodafone announces £1 billion of cost savings

It seems as though the need to cut costs has now spread to the mobile telecoms market with industry giant Vodafone announcing plans for £1 billion in cost savings. The group has suggested a rise in raw material prices and increased competition in the sector is the reason behind this cost-cutting programme and in line with the difficult market conditions revenue forecasts for the group (for the full year) have been cut back to £38.8 billion against earlier forecast of £39.7 billion.

Revenue for the first six months, to end of September increased by 17% to £19.9 billion although a significant amount of this was due to currency gains. Adjusted profits for the group after significant write-offs amounted to £3.3 billion for the half-year, a fall of just under one third for the new management team.

The mobile phone industry offers a useful insight into both local and worldwide economies as this is a sector which touches many areas of society and can feel the pinch when the economy starts to slow. It will be interesting to see how others in the sector are performing and how they plan to stay competitive in what are still very difficult market conditions.

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