Vodafone's new chief to cut operating costs

Vodafone's new chief executive Nick Read said he would reduce operating costs by 1.2 billion euros ($1.35 billion) by 2021 and review its tower assets to drive higher returns at the world's second largest mobile operator.

Read replaced Vittorio Colao at the top of the British company after the Italian ran the group for 10 years.

Read said he would also freeze the dividend until the British company has reduced its debt pile.

"My new strategic priorities focus on ... radically simplifying our operating model and generating better returns from our infrastructure assets," Read said on Tuesday.

The initial market reaction was positive, with Vodafone shares trading 7 percent higher shortly after the market opened.

The shares had fallen 39 percent since the beginning of the year as investors fret about the cost of acquiring Liberty Global's cable assets in Germany, the outlay on new spectrum for 5G services and tougher conditions in some European markets.

Read said he had taken decisive commercial and operational actions to respond to challenging conditions in Italy and Spain, and would reduce Vodafone's costs for the third year running.

As part of a move to drive better returns from investments and to share capital assets where possible, it would create a "virtual tower" company to manage the 58,000 towers it controls across Europe, with a dedicated management team.

Colao announced his departure in May a week after Vodafone clinched a long discussed deal to pay $21.8 billion to buy Liberty Global's assets in Germany and eastern Europe. That should allow it to take the fight to rivals with a broader range of superfast cable TV, broadband and mobile services.

On Tuesday the group showed it was operating generally in line with forecasts.

It reported group service revenue of 19.7 billion euros and adjusted earnings of 7.08 billion euros, up 2.9 percent on an organic basis for the six months to end of September, broadly in line with market forecasts.