Vodafone lowers targets, goes for convergence

Vodafone continues to drip-feed investors with gloomy news. Admitting that growth is slowing, it has lowered the performance targets for its executive bonus packages – instead of having to grow by 8% to 16% a year over three years to qualify for generous share options, management will only need to record growth of 5-10%.

The just-published report and accounts show that chief executive Arun Sarin racked up £2.7m in pay and bonuses for the year to March 2006, during which his company made the biggest loss in British corporate history (£21.8bn).

On the plus side, Vodafone has been publicising a new European strategy, based on reducing costs and raising revenues – a combination which you can’t really argue with. The cost reductions come from a variety of outsourcing, centralising and other tactics to trim overheads. For the revenue gains, Vodafone has a number of proposals – moving prepay users to contracts, introducing ‘family plans’ to stimulate usage, and promoting Passport roaming plans.

There will be ‘homezone’ products of bundled broadband offerings, to be introduced first in Germany. Vodafone is also promising application integration between mobiles, PCs and the internet, and it will be introducing advertising-based services and business models.
In the UK, Vodafone has said its ‘Mobile Plus’ converged services will be implemented inhouse – by buying broadband lines wholesale from providers such as BT rather than by acquiring an existing broadband ISP.
Vodafone plans to earn more
than £3bn a year from new services
by 2010.

Arun Sarin: the £2.7m man 

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