Vodafone has increased its UK cost-saving target to £1 billion annually by 2032, up from an earlier goal of £700 million by 2030, following its full acquisition of Three UK. The telecommunications group completed the £4.3 billion buyout of CK Hutchison’s 49% stake in Three in July, consolidating the merger announced last year that created the UK’s largest mobile operator.
The company plans to achieve these additional savings primarily by streamlining its mobile network, including reducing the combined number of masts and towers from about 37,000 to approximately 26,000. Vodafone executives emphasized that these efficiencies would not lead to further job losses, with cost reductions also expected from eliminating duplication made possible by full ownership of the venture.
Margherita Della Valle, Vodafone’s group chief executive, described the enhanced target as a reflection of growing confidence following a strong start to the merged business. Speaking on the strategy, she highlighted the creation of Vodafone Three as an opportunity to build scale for investment, particularly in network upgrades.
Vodafone is committing around £11 billion to upgrade its UK mobile infrastructure over the next decade, aiming to deliver 5G standalone coverage to 99.95% of the country by 2034. The investment forms part of a broader business shift, with Vodafone focusing on key markets including the UK, Germany, and Africa, while divesting other assets in Italy and Spain.
Financially, the merged entity set ambitious goals beyond cost savings, targeting mid- to high single-digit compound annual growth in adjusted earnings and more than tripling operating free cash flow by 2032. VodafoneThree’s chief executive, Max Taylor, noted that adjusted earnings grew by 4.5% last year, and the company expects to accelerate progress on its plans this financial year, with around £100 million in synergies anticipated by March from combining retail outlets and streamlining procurement and marketing expenses.
Despite these positive developments, Vodafone acknowledged challenges in the UK market. Organic service revenue in the UK declined by 0.2% in the fourth quarter, affected by pricing pressures, particularly in business mobile sectors, and the conclusion of some contracts. Overall, however, the group saw a 5.4% rise in organic service revenue worldwide and a 4.5% increase in adjusted profits before interest and taxes, driven by faster growth in Turkey and Africa.
Meanwhile, in July, French telecom entrepreneur Xavier Niel agreed to purchase an 18% stake in Vodafone, pending regulatory approval, positioning him as the company's largest shareholder. Vodafone’s shares have risen 48% over the past year but experienced a slight drop following the announcement of the revised cost-saving target.
The merger and subsequent cost efficiencies reflect a strategic reshaping under Della Valle’s leadership, aiming to strengthen Vodafone’s market position through scale and operational improvements without further workforce reductions.