Vodafone Sees Euro 1 Billion In Cost Cuts

The world economy may be sinking, but for Vodafone Group its U.S. investment is doing quite well.

The world's largest cell phone service provider reported a 35% drop in six-month profit in its mid-fiscal year report that includes several countries scattered around the world.

Vodafone chief executive Vittorio Colao cited the firm's investment in Verizon Wireless as a key bright spot in the financial report, his first since taking over as CEO in July. The key dismal spot, however, was Vodafone's performance in Turkey where the company has named a new top executive to work to turnaround the slumping operation there.

"We will improve operational performance through customer value enhancement and cost efficiency, supported by a Euro 1 billion ($1.56 billion) cost reduction program," Colao said in a statement. "We will pursue growth opportunities in total communications specifically mobile data, enterprise and broadband."

Colao took over the direction of Vodafone as a rump stockholder group demanded Vodafone spin off its ownership in the Verizon unit or pressure Verizon management for more value from the deal. By keeping things as is, Vodafone has shared in the wealth of Verizon Wireless, which enjoyed 12.5% revenue growth to $12.7 billion in its latest report.

Verizon Wireless had sputtered trying to get off the ground in its early days, but it has racked up increasing revenue and profits in recent quarters. With its recent acquisition of Alltel, Verizon Wireless is now the largest wireless service provider in the US.

Colao said Vodafone's previous strategic plan -- formulated in 2006 -- has served the firm well. "However, a number of challenges have evolved," he said in his strategy review this week. "We are clearly entering into a more difficult macro economic environment."

He added that Vodafone's newly-formulated strategy calls for the firm to focus on four key objectives -- "drive operational performance, pursue growth opportunities in total communications, execute in emerging markets and strengthen capital discipline."