Vodafone shake-up 'heralds move into fixed line'

Vodafone moved to pacify the City yesterday with a radical management shake-up and hints of a new business strategy.

The mobile phone giant is to be split into three fiefdoms to be run by three managers reporting to Arun Sarin, the chief executive.

The third division - new business and innovations - attracted most attention as it led to suggestions that Vodafone would move strongly into the market for home phones, possibly via an acquisition.

It seems more likely that it will offer some deals that mimic fixed-line offerings from the likes of BT, rather than buying a traditional telecom company. One telecom banker said: "They are not going to buy BT. That would be absolutely nuts."

The new division will look to sign partnership deals with media companies, expanding the range of what customers can receive on their mobile phones.

The management shake-up comes after a tough period for Mr Sarin, with some calls for him to be fired following investor anger at the falling share price.

The other two divisions will be Europe and the rest of the world. Europe, the most mature mobile market, will be led by Bill Morrow, who recently sold Vodafone's Japan arm.

Paul Donovan will lead the rest of the world division, which includes the US, China, Asia and Africa.

Thomas Geitner, also a main board member, will run the new business arm.

The plan is to squeeze as many costs as possible out of the mature businesses while aggressively looking for new streams of revenue.

Vodafone shares put on 0.75p to 124.25p.