THE new Vodafone chief executive Vittorio Colao will this week outline a fresh cost-cutting programme as he reveals how the mobile-phone giant has been hit by the drop in consumer spending.

Analysts reckon that Colao, who succeeded Arun Sarin in July, can easily strip out another £1 billion from the company’s cost base. Some think up to 20% of Vodafone’s workforce in western Europe could be at risk over time.

“Whether they set a target now or in May, there will have to be a cost plan,” said Terence Sinclair, telecoms analyst at Citigroup. “£1 billion is just 3% of sales.”

The company is expected to report that trading has remained tough in Spain and Britain. Sarin signed off by reining in sales forecasts for the year. Since then, Vodafone’s shares have tumbled 20% on fears that it may not be such a defensive investment during a global recession. On Tuesday it is expected to post a half-year operating profit of £5.7 billion on sales of £19.8 billion.

Most of the new savings will be made in the mature mobile-phone market of Europe, where Michel Combes arrived as boss on October 1 to replace Colao. Combes is expected to continue expanding broadband operations, although he is cautious on spending right now.

Last week, the company succeeded in winning control of South Africa’s Vodacom after paying £1.4 billion for a 15% stake, taking its holding to 65%.

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