Vodafone reels in costs at Arcor

VODAFONE is taking a knife to costs at its German fixed line telecoms business, Arcor, after discovering that internal sales targets will not be met.

It dismissed talk of 1,000-2,000 job cuts on top of the 580 announced since the summer, but admits that further cuts are likely if it is to improve its performance.

Arcor, the strongest competitor to Deutsche Telekom, currently employs about 9,000 people. 'The details have yet to be decided,' a spokesman said.

Analysts said the cuts reflect Vodafone's unwillingness to invest heavily in a business it eventually wants to sell. 'They are running it steady as she goes,' said one. Vodafone fell 3 1/2p to 175 1/2p.

Like many fixed line operators, Arcor is suffering in the current slowdown.

Competition for voice services is intense and few customers want to sign up for expensive internet services at a time of such uncertainty.

Vodafone does not provide details of Arcor's financial performance, but said its fullyear sales will be 'slightly higher' than in 2000.