Vodafone cuts 450 jobs but invests in data products

Vodafone is cutting 450 jobs and trimming its senior management team by 20 per cent as part of plans to reduce costs and boost sales of next-generation data services such as mobile internet.

The redundancies will be offset by the recruitment of an extra 330 retail advisers to focus on data products, an extra 130 sales and service roles in the firm's enterprise business, and another 30 staff for its online and customer service team. The company is also building an 850-seat customer service centre in Stoke-on-Trent.

Nick Read, the company's chief executive, said: "Vodafone UK is clearly focused on building on its market-leading position in data products and services. Today we are announcing a series of targeted investments to meet growing demand in this area, whilst simplifying the way we work, putting the customer at the heart of everything we do."

The plans are a reasonable strategy in a changing industry, according to analysts. The market for voice calls and basic data services such as text messages (SMS) is becoming saturated, and mobile operators across Europe are looking for efficiency improvements, capital expenditure reductions and new income streams.

"As the dynamics of the business change, operators are having to cut their cloth accordingly," Andrew Parkin-White, a principal analyst at Analysys, said. "SMS is flattening off and voice revenues are falling, so data is the thing operators are looking for to keep sales of the order that they want," he said.

Mobile data services, such as internet access and multimedia downloads, are on the rise. Vodafone says its non-SMS data business is worth £400m and is growing at 28 per cent per year. And Analysys predicts European operators' current non-voice revenues of €6 (£4.70) per user per month will rise to €11 within five years.

"By 2012 we expect the data market to nearly double in size, and basic SMS will be a much smaller proportion of it," Mr Parkin-White said.

Vodafone's strategy includes investment in the extra sales advisers needed to sell as-yet-unfamiliar data services. and a new customer service centre.

Last month Vodafone announced a network-sharing deal with Orange that will reduce capital expenditure and increase the availability of third-generation services, which followed a similar agreement betweenT-Mobile and 3 in December.