Restructuring into three units aimed at keeping group in top spot
Vodafone splits in cost cutting move
April 7, 2006
By Roland Jackson
London - Vodafone would split into three business units in a restructuring plan aimed at keeping its position as the world's leading cellular telecommunications group, it announced yesterday.
The move, which is aimed at cutting costs, comes amid shareholder unease at lower growth prospects.
Vodafone said in a statement to the London Stock Exchange that the three divisions would be Europe; new businesses and innovation; and Central Europe, Middle East, Asia Pacific and affiliates.
Investors applauded the reorganisation, sending the group's share price 2.23 percent higher to £1.2625 (about R13) late yesterday morning.
"This is an important step forward," said chief executive Arun Sarin. "It will enable us to continue to outperform our competitors."
Vodafone said Bill Morrow, the president of the business in Japan, would head the new Europe unit.
Paul Donovan, the head of other Vodafone subsidiaries, would become the chief executive of Central Europe, Middle East, Asia Pacific and affiliates. New businesses and innovation would be run by Thomas Geitner, who is now Vodafone's chief technology officer.
Sarin said: "By creating three new business units, and with an increased focus on costs, we are reflecting the different approaches that will be required to continue to succeed, both in terms of our existing operations and in capturing new revenue streams."
Faced with falling growth rates in its core western European market, Sarin has come under pressure from shareholders to shake up international strategy.
Last month Japanese internet and telecoms group Softbank agreed to buy Vodafone's struggling Japanese subsidiary for £8.9 billion.
Sarin stressed that there were no plans to exit Vodafone's operations in the US.
There has been speculation that Vodafone was looking to sell its 45 percent stake in US cellular operator Verizon Wireless.
Vodafone's departure from Japan marked an end to two decades of aggressive global expansion by the British company, once a market darling at home.
The group said it would return £6 billion to shareholders following the sale, either via a once-off dividend or the issue of new shares.
Last year Vodafone agreed to pay R21 billion for an additional 50 percent of shares in South Africa's Vodacom, expanding its shareholding to 50 percent. - AFP
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