Vodafone will shed hundreds of jobs in Britain as part of its attempt to cut costs by £1 billion amid the recession.

The mobile phone group, which employs 10,000 people in the UK, is expected to announce today that cuts will be made from lower-ranking staff across its business. Although Vodafone declined to comment on the extent of the losses, unions said that they were braced for “significant” cuts.

The company, which said last year that it was preparing to weather the recession by cutting £1 billion from its annual £22 billion operating costs, joins a growing list of communication companies, including Virgin Media, BT and Cable & Wireless, that are cutting staff.

Analysts had thought that mobile phones would be relatively immune to the recession. Increasingly, that is proving not to be the case. Nokia, for example, the world's biggest manufacturer of mobile phone handsets, has warned of a 10 per cent drop in the handset market this year.

Studies have indicated that consumers plan to spend less on their mobile phones, making do with older handsets and switching some calls back to their fixed line as they cut spending.

Vodafone, whose shares have tumbled by more than 20 per cent in the past year, is facing falling sales in its core European markets, such as Spain, as well as slowing growth in its supposed growth engines of Turkey, Romania and Egypt. The group twice scaled back its full-year revenue target last year. Its recent third-quarter figures revealed a 1 per cent drop in underlying sales, despite the weaker pound working in its favour.

Last year Vodafone dismissed a fifth of its senior head office managers, with 450 job losses from its UK operations. However, nearly 500 sales and retail staff were recruited at the same time.

A spokesman for Connect, the union that represents workers in the communications industry, said: “We are awaiting a formal announcement from the company but it does look likely that there will be a significant number of redundancies in the UK. We will be urging the company to work with us to explore options around re-training and redeployment.”

Vodafone, which has its headquarters in Newbury, Berkshire, employs 80,000 people globally, with operations in 25 countries and partnerships in a further 42. It recently announced plans to merge in Australia with 3, a rival operator, which is owned by Hutchison. The tie-up is aimed at helping Vodafone to improve its performance in the continent, where it is only the third-biggest player.

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