Vodafone plans to cut costs by one billion euros amid energy and inflation hit
Mobile phone giant Vodafone expects its full-year profits to be impacted by higher energy costs and inflation – as it plans to cut costs by one billion euros (£880 million).
The company said it will streamline and simplify its group-wide structure and accelerate the digitalisation of its operations.
Its chief executive said the network will also take “pricing action” across Europe to mitigate against high energy bills and rising inflation – meaning prices could go up for customers.
Vodafone has already implemented price changes in 12 out of 13 European markets, including raising contract prices, reducing promotional discounts and linking prices to inflation.
It comes as the Berkshire-based mobile network said its adjusted earnings dipped by 2.6% in the first half of its financial year, driven by commercial underperformance in its largest market, Germany, and a one-off legal settlement in Italy.
It saw a modest rise in revenues, by 2%, to 22.9 billion euros (£20.1 million), up from 22.5 billion euros (£19.7 million) in the same period last year.
The company lowered its full-year earnings guidance by 300 million euros (£263 million) at the upper end of expectations as a result of the worsening macroeconomic climate since May.
It now expects to make between 15 and 15.2 billion euros (£13.15 and £13.3 billion), down from 15 and 15.5 billion euros (£13.15 and £13.6 billion) set out earlier this year.
Vodafone’s chief executive Nick Read said: “In the context of a challenging macroeconomic environment, we are delivering a resilient performance this year, alongside making good progress with our operational and portfolio priorities.
“We are taking a number of steps to mitigate the economic backdrop of high energy costs and rising inflation.
“These include taking pricing action across Europe, whilst at the same time supporting our most vulnerable customers and driving energy efficiency measures across the business.
“We are also announcing today a new cost savings target of one-plus billion euros focused on streamlining and further simplifying the group.”
Vodafone said it is conscious of financial pressures its customers are facing and has implemented a cost-of-living plan to help people.
It includes social or low-cost tariffs, extra measures to support customers and business and helping customers reduce their energy usage.
Last month, Vodafone said it was in merger talks with rival mobile network Three to accelerate the rollout of 5G in the UK.