Vodafone rings the changes, creating three new divisions

Published on 07/04/2006 01:19

VODAFONE rang radical organisational changes yesterday with the tripled-pronged aim of cutting costs in mature markets, boosting growth in emerging markets and tapping new technologies.

The world's biggest mobile telecoms group, battling with slower growth in core markets such as Germany and Italy, said it would in future be managed through three new business units, each with its own chief executive - Europe; Central Europe, Middle East, Asia Pacific and affiliates; and a third division called New Business and Innovation. City analysts said the revamp showed a desire by chief executive Arun Sarin to draw a line under perceived management infighting at the group and pressure from institutional investors for change.

Sarin said: "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."

Vodafone said Bill Morrow, currently president of Vodafone's business in Japan, would be 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 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.

Analysts said the new structure better reflected the challenges facing Vodafone. They were particularly interested in 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. Tajesh Tailor at SG said: "This gives some indication of their strategy update that's going to happen at the full-year results [on 30 May 30]."

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

Sir Chris Gent, the former chief executive, quit his honorary position of life president last month, and the firm has forced out marketing chief Peter Bamford.

Vodafone shares closed 0.6 per cent higher at 124.25p.