Vodafone raises VodafoneThree cost savings target to £1 billion by fiscal 2032
Vodafone is raising annual cost savings at VodafoneThree to £1 billion by fiscal 2032, and plans to cut its mast and tower network from around 37,000 sites to about 26,000. The extra £300 million a year sits on top of the original £700 million target.
A higher savings target
Vodafone said on Thursday that it has raised the cost savings target for VodafoneThree, the UK business created by the 2025 merger of Vodafone UK and Three, to £1 billion a year by fiscal 2032. The previous target was £700 million a year by 2030, and the company has now earmarked another £300 million of annual cuts on top of it. Vodafone said it will increase annual savings to £800 million by 2029-2030 and to £1 billion by 2031-32. Reuters put the new target at $1.32 billion, while Bloomberg rounded it to $1.3 billion.
- FY2029-30
- 800 £m
- FY2031-32
- 1000 £m
Margherita Della Valle, group chief executive of Vodafone, tied the higher target to the progress made since the merger.
After a strong start, we now have even greater confidence in the opportunity ahead.
She went on to describe the unit's future role within the group.
That's why we are upgrading our cost target to £1 billion, with VodafoneThree set to become an increasingly important contributor to Vodafone's growth ambitions.
Mast network and workforce
The extra savings are set to come from moves to cut the mobile phone mast and tower network, which Vodafone plans to reduce from around 37,000 to about 26,000 sites. Some Vodafone and Three UK sites are located close to each other, which is why the network can be consolidated. Vodafone also expects to strip out costs from full group ownership where there is unnecessary duplication. The company insisted the extra savings would not affect its workforce. Since completing the merger, the company has been working to integrate the two brands, including sharing their 5G networks.
- Current (around)
- 37000 sites
- Planned (about)
- 26000 sites
Full ownership and scale
Vodafone agreed in May to acquire the 49% stake in VodafoneThree held by CK Hutchison Group Telecom Holding, the China-based partner. The purchase was completed in July for £4.3 billion. The merged business is valued at nearly £14 billion including debts. VodafoneThree had about 27 million customers after combining, and up to 50 million people in the UK have access to its 5G speeds through the combined spectrum. Vodafone also plans an £11 billion investment over 10 years to build an independent, AI-ready 5G network.
Earnings and cash flow targets
In its investor update, Vodafone set a goal of underlying earnings growth in the mid-to-high single digits a year. The start of that period is given as 2024-25 in one report and as 2025 in another, with the end point given as 2031-32 and 2032 respectively. Vodafone also aims to more than triple operating free cash flow at VodafoneThree by 2031-32, compared with 2024-25.
