Vodafone lifts lid on new products, SFR, Verizon

Vodafone's CEO Arun Sarin has today given the rumour mill another spin, confirming the company's latest thoughts on French mobile operator SFR, Verizon Wireless and buying a fixed line provider.

Sarin said today that despite a new strategic direction which will show greater restraint where mergers and acquisitions are concerned, Vodafone is still interested in buying the French mobile operator SFR which it runs as a joint venture with media conglomerate Vivendi.

He said: "If SFR comes up for sale at the right price, we might be interested." He also maintained a neutral position on the much discussed sale of its stake in US operator Verizon Wireless, saying: "At this stage, Vodafone is happy with its stake in Verizon Wireless."

Sarin made the comments on the day the mobile giant announced its latest set of full year results, revealing losses of nearly £15bn and a strategic review that will see 400 jobs cut.

The huge losses follow the write-down of Vodafone's assets by £23.5bn after it acknowledged it had overpaid to acquire the German company Mannesman back in 2000.

The results saw Vodafone increasing its revenue by around 10 per cent year on year to reach £29.4bn, although ARPU in Europe remained flat. Sarin confirmed that Vodafone had been "going backward" in the UK - facing competition it couldn't respond to from new T-Mobile tariffs. Sarin promised a refresh to UK pre- and post-pay offerings soon.

Sarin also announced the loss of 400 jobs, to affect those in marketing and technology in the company's headquarters. Contractors will be among the first to leave.

In light of the results, Vodafone has announced a new strategic direction, based on several principles: reducing costs and driving revenue in Europe, focusing on emerging markets, aligning shareholder revenues with the new strategy, as well as what it calls 'actively managing its portfolio to maximise returns'.

Following a period of acquisitions which saw buys in the Czech Republic, Romania, South Africa and Turkey, Vodafone now envisages a "lower level of merger and acquisition activity" in the future.

John Delaney, analyst at Ovum, described the strategy as "interesting and pretty credible", adding: "The emerging markets are an area where Vodafone has been a little ad hoc - there's been an odd acquisition here and there but no clear direction. Sarin is making reassuring noises the period of empire building is behind it."

The mobile giant also announced it will be looking to cater to its customers' 'total communications needs', adding a DSL offering to its roster – although Vodafone's CEO denied interest in buying a DSL provider.

Sarin said: "We have no fixed line burden. If customer wants a DSL bundle, we'll go buy DSL capacity [from a third party supplier]... We're not interested in buying a DSLAM company." A DSLAM is a network device that receives signals from many DSL connections and routes them onto a high-speed backbone line.

Vodafone is not against going into the DSL market itself though, said Sarin: "We will resell DSL initially but we will, on a country by country basis, consider unbundling."

The mobile operator will also be looking to earn extra revenue from advertising, subsidising services for customers who opt in to receive promotional material.

The moves have reassured financial analysts and the markets - Vodafone shares rose by nearly three per cent.

Dresdner Kleinwort Wasserstein analyst Robert Grindle said in a research note: "The company's attention to cost control... and new products and services (advertising, home zone, mobile DSL) all appear eminently sensible."