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Vodafone rejigs to cut costs, drive growth

Written by: Staff
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LONDON, April 6 (Reuters) British mobile phone giant Vodafone unveiled a new organisational structure on Thursday aimed at cutting costs in mature markets, boosting growth in emerging markets and tapping new technologies.

The firm, battling with slower growth in core markets such as Germany and Italy, said it would be managed through three new business units -- Europe; Central Europe, Middle East, Asia Pacific and Affiliates; and New Businesses and Innovation.

The revamp also includes the latest in a series of management changes by Chief Executive Arun Sarin, who has come under fire for the sluggish performance of Vodafone's shares.

Analysts said the new structure better reflected the challenges facing Vodafone, and were particularly interested by the firm's pledge to look at extending its reach in new technology areas such as converged services, which link mobile and fixed-line devices, and Internet services.

''This is an interesting statement because it gives some indication of their strategy update that's going to happen at the full-year results (on May 30),'' said Tajesh Tailor at SG.

He said the focus on new technologies raised the question whether Vodafone would have to make acquisitions, or whether it would be able to rent infrastructure it does not already own.

A Vodafone spokesman said it was too early to say how the firm would look to extend its position in new technologies.

''I wouldn't necessarily jump just to the conclusions that we ourselves will be pulling loads of fixed-line business or anything else,'' he said. ''It may be that we partner up with someone else who already does that. It's all highly speculative at this stage.'' At 0945 GMT, Vodafone shares were up 1.6 percent at 125-1/2 pence, valuing the firm at 75 billion pounds (1 billion). The shares have underperformed the European telecoms sector by around 12 percent over the past year.

MANAGEMENT TEAM ''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 for the future,'' Sarin said in a statement.

Vodafone said Bill Morrow, currently president of Vodafone's business in Japan, would be the chief executive of the new Europe unit. Vodafone agreed last month to sell its Japanese business to Softbank Corp.

Paul Donovan, currently chief executive of the firm's Other Vodafone Subsidiaries unit which includes operations in emerging markets, will head the Central Europe, Middle East, Asia Pacific and Affiliates division.

Thomas Geitner, currently group chief technology officer, will head the new businesses unit.

The appointments, which become effective on May 1, follows a series of changes at the top of Vodafone as Sarin stamps his authority on the company following reports of boardroom splits.

Chris Gent, the former chief executive, quit his honorary position of life president last month, while the firm forced out another member of its old-guard, marketing chief Peter Bamford.

REUTERS MP BD2035

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