Vodafone accelerates cost cuts

By Kate Holton

LONDON (Reuters) - Vodafone, the world's largest mobile phone firm by revenues, is to speed up cost-cutting plans after forecasting flat profits at best for 2010 and announcing a 5.9 billion pound impairment charge.

Vodafone Group (VOD.L), which said the charges were due to problems in Spain, Turkey and Ghana, also posted 2008-09 revenue, earnings and free cash flow in line with forecasts.

For 2010, it set out an adjusted operating profit range that would be flat at best and failed to give a specific revenue forecast after twice revising it down in the financial year just ended. But it predicted free cash flow would grow.

Analysts were divided over the results and Vodafone's shares slipped 0.9 percent by 12:08 p.m. on the impairment, outlook and tough European conditions, underperforming a 1 percent rise on the FTSE 100 index.

Vodafone, like other mobile operators, has struggled with the recession in Spain where customers are looking for cheaper deals, and it has also had to boost its network in Turkey to properly compete there.

On top of the two difficult markets, the company said revenue from voice calls and messaging declined in its more mature regions, while roaming charges also fell due to lower business and leisure travel.

But the results showed signs of the company's new strategy coming through, with a good performance from India and Africa, data charges from customers surfing the Internet up 44 percent and improved cost controls.

"We are confident that our strategy is appropriate for the current operating environment," the group of 303 million customers said.