Vodafone reveals plan to cement position
The move, which is aimed at cutting costs, comes amid shareholder unease at lower growth prospects at the group.
The three divisions will comprise Europe, New Businesses and Innovation, and Central Europe, Middle East, Asia Pacific and Affiliates, Vodafone said in an official statement to the London Stock Exchange.
Investors applauded the reorganisation, sending the group’s share price 0.61% higher to 124.25 pence at the close.
Thursday’s news helped send London’s FTSE 100 index of leading shares, on which Vodafone trades, up 0.03% to to 6,045.7 points – the highest close since February 19, 2001.
"This new structure is an important step forward for the group as it is aligned with our evolving strategy and addresses the different priorities across the group," Vodafone chief executive Arun Sarin said in the release.
"It will enable us to continue to outperform our competitors as the changes deliver a streamlined and simple structure with a clear focus." Vodafone said that Bill Morrow, currently president of the business in Japan, will head up its new Europe unit.
Paul Donovan, the head of OVS (Other Vodafone Subsidiaries), is to become chief executive of Central Europe, Middle East, Asia Pacific and Affiliates.
The other new unit, New Businesses and Innovation, will be run by Thomas Geitner, currently Vodafone’s chief technology officer.
"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 added.
Faced with falling growth rates in its core western European market and an alleged boardroom revolt, Sarin has come under pressure from Vodafone shareholders to shake up the group’s international strategy.
Last month, Japanese Internet and telecoms group Softbank Corporation agreed to buy Vodafone’s struggling Japanese subsidiary, Vodafone KK, for 8.9 billion pounds ($15.6bn).
At the same time, Sarin stressed there were no current plans to exit Vodafone’s operations in the US. There has been speculation that Vodafone was looking to also sell its 45% stake in US mobile operator Verizon Wireless, again in response to growing shareholder pressure.
The divestment of Vodafone KK came as Sarin appeared to have stamped his authority on the embattled telecoms group he runs.
Sarin’s predecessor, Christopher Gent, resigned last month as Vodafone’s honorary president following reports of a rift among the management of Vodafone.
Industry sources meanwhile said Thursday that Vodafone was considering expanding further into the fixed-line sector, including a possible bid for an established operator in Western Europe.
AFP’s financial newswire AFX News, citing the sources, said Vodafone was training its sights on the maturer mobile phone markets of Britain, Spain and Italy.
The company also plans to hang on to its German fixed-line subsidiary Arcor, which had previously been touted for sale, the sources said.
They added that Vodafone’s exploration of the fixed-line market was still at an early stage. Vodafone declined to comment on the specific report.
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