Vodafone plans to cut costs by one billion euros amid energy and inflation hit

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, which means 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 per cent 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.

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.

Commenting on the results, Matt Britzman, an equity analyst at Hargreaves Lansdown, said “It’s certainly not plain sailing at Vodafone right now. Warnings that weaker economic conditions and rising costs are set to bring full year results down from previous guidance put a dampener on half year results.

"A €1bn extension of the existing cost savings programme and further pricing actions are being brought in to try and keep rising costs in check.

He added: “Challenges remain in Germany, the group’s largest region, with the group losing customers in both broadband and TV. New legislation came into effect at the start of the year and Vodafone’s battled with compliance with the new rules and finding essential cross-selling opportunities under the new way of operating.

“Talks are still underway with Hong Kong-based CK Hutchison about a possible merger of its UK business with Three UK. Aside from the significant regulatory hurdles that’d have to be overcome, Vodafone’s motives are to create a company with bigger scale to fully capitalise on the opportunities provided by the 5G roll out.”