Vodafone chief outlines £2.5bn plan to cut costs

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The Independent Online

Arun Sarin, the chief executive of Vodafone, revealed yesterday the company was expecting to deliver annual cash flow improvements of £2.5bn by March 2008.

He also held out the prospect of higher dividend payments while reiterating the company's financial guidance for the current year. Mr Sarin was speaking at the mobile phone group's annual investors and analysts day that was broadcast live on the internet.

The £2.5bn of annual pre-tax operating cash flow improvements would be delivered through the company's "One Vodafone" programme, Mr Sarin said. "We are announcing today that by 2007-08 we expect to deliver One Vodafone benefits of £2.5bn annually. Any way you think about that number, it's a huge number," he said.

One Vodafone is the strategy aimed at producing greater financial benefits from the company's scale as the world's leading mobile phone group. Vodafone's management has been trying for some time to make the sprawling group operate more efficiently. Mr Sarin said of the £2.5bn, cost initiatives would account for £1.4bn with £1.1bn through revenue improvements delivered by the One Vodafone initiative.

Investors also heard Mr Sarin hold out the prospect of higher dividends in the future. He said the company was aware that it was paying out 22 per cent of its earnings and that it was interested in having a "competitive" dividend going forward.

Mr Sarin repeated his interest in buying out Vivendi Universal from their joint venture in France, SFR, continuing a trend for the company to take full control of its interests around the world. It recently bought out the minority shareholders in its Japanese operations, although it still has a joint venture in the US with Verizon Communications.

Mr Sarin reassured investors that the company would be making its long-awaited entry into the third generation (3G) mobile phone market in time for Christmas.