Vodafone unveils a new image in chase for growth

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The Independent Online
Vodafone, the UK's largest mobile phone group, yesterday attempted to kick-start flagging growth in its subscriber base by launching a new corporate image coupled with a rationalisation of its retail chains.

The new identity will replace six different high street brands with a single Vodafone logo, a redesign which cost the company pounds 250,000. It means the group has in effect ditched the legacy of the 1980s, when the Department of Trade and Industry tried to encourage competition between independent service provider chains which sold wholesale airtime to customers.

The changes follow Vodafone's recent takeover of service providers including Peoples Phone and Talkland, which increased the number of retail and distribution businesses to six, many of which were competing against each other. Almost 90 different tariffs would drop sharply, while five separate computer billing systems would merge into one.

In the process Vodafone will close two offices, the former headquarters of Peoples Phone in Cricklewood in north London and Astec in Cheltenham, with the loss of up to 300 jobs. The group said no more than 250 staff would be made redundant out of the 3,500 employed across the business, while staff numbers would rise by the end of next year.

Combined with the new billing system, Vodafone predicted the rationalisation would knock pounds 20m off its profits this year, which had been forecast by analysts at between pounds 585m and pounds 615m. Chris Gent, chief executive, said future profits would improve by pounds 10m in the following year and pounds 35m in 1999. The news knocked 7p off Vodafone's share price, which ended at 299p.

"We believe that these changes are a fundamental pre-requisite to achieving higher growth in the years to come and to sustaining Vodafone's position as the UK market leader," said Mr Gent.

Analysts said the reorganisation was inevitable in the face of stiff competition from newer challengers. "It became apparent ever since the rise of Orange and One 2 One, which can sell to customers in a much more coherent and unified way, that Vodafone had to grasp the situation," said one analyst.

Despite a disappointing drop in sales growth during the spring, Mr Gent repeated his bullish predictions for the UK mobile market. He claimed the company would win 500,000 net new customers each year over the next 3 years.

In addition, the total mobile market of 7.4 million would expand to 20 million over the next 10 to 12 years. The proportion of people with mobile phones would surge from 13 to 35 per cent, a level seen only in Scandinavia. Vodafone recently dropped from being one of the fastest expanding networks to being the slowest growing of the four UK operators.