Vodafone extends cost cutting scheme

Vodafone Group, the world's largest mobile operator by revenue, is to ramp up cost cuts after a successful start to the programme offset competition in Europe and India to deliver first half results as expected.

Vodafone reported first half revenues, earnings and adjusted operating profit all in line with forecasts and confirmed its guidance but said free cash flow would be at the upper end of its original target due to foreign currency benefits and improved working capital.

It reported first half free cash flow ahead of expectations at 4 billion pounds, compared to a Reuters poll that forecast 3.5 billion pounds.

Vodafone launched a 1 billion pound (USD 1.68 billion) cost cutting scheme a year ago and accelerated the rate in May after confronting saturated markets in Europe and a slowing rate of growth from increased competition in emerging markets.

On Tuesday the firm, which has underperformed the FTSE 100 by 13% this year, said it would deliver that programme a year ahead of plan and said it would now extend this to a further 1 billion of cost savings by 2012.

Vodafone, which has also been hampered by regulatory changes and lower consumer spending across its territories, reported first half earnings before interest, tax, depreciation and amortisation (EBITDA) of 7.5 billion pounds, in line with expectations.

It reported half-year revenues up 9.3% to 21.8 billion pounds, also bang in line with the Reuters poll of 12 analysts. Revenues were down 3% on an organic basis.