Vodafone Germany Might Decide On Fixed Line Operations Late May

DUESSELDORF, Germany -(Dow Jones)- Vodafone Germany might decide on the future of its fixed line unit Arcor as soon as late May, Chief Executive Friedrich Joussen told Dow Jones Newswires Thursday.

"For certain customer groups we need digital subscriber lines," Joussen said. Vodafone, which so far has focused on mobile communication services, needs broadband related elements, he said.

Against this backdrop, the company is still discussing whether to keep its German unit Arcor or whether to sell it, as previously planned. "This is part of our ongoing strategic discussions," the CEO said.

Late May, when the company's yearly figures are due, first results of the strategic discussion might be released, Joussen said. However, press reports saying the company aims to strengthen its fixed line business by further acquisitions are pure speculation, he said.

Joussen, who became CEO in October 2005, wants to make Vodafone Germany the number one in sales growth mid-term by doubling mobile data sales and the number of mobile telephone minutes, he said. In order to reach those figures he is willing to further cut prices.

Joussen has elaborated a six-point program for the current fiscal year, which started April 1. "We want sales to grow stronger than the market," he said.

This announcement comes as the sector faces tough competition and declining revenues from fixed line calls. In the last quarter of 2005 Vodafone Germany's revenue stagnated.

Just as market leader T-Mobile International and the smallest competitor 02, Vodafone Germany counts on mobile data communication, a service to transfer music or other data via cell phones, which is used by a relatively small number of customers.

Joussen plans to double the sales of those services in the coming years. In the previous year they contributed 4.7% to group-wide sales, according to Joussen. He declined to give details of the exact schedule.

A strong increase of volumes of mobile telephone numbers, due to further price cuts, are also expected to fuel growth, according to Joussen. Those cuts don't simply aim at prices per minute, but mean more attractive price plans. At the same time, Joussen plans to simplify price plans. Low-price competitors don't offer a threat to Vodafone Germany, Joussen said. A number of those are going to vanish from the market, he added.

Price incentives are no problem for Vodafone Germany, as the company has the best cost structure in the sector, the CEO said. With his new program he also plans to further cut operating costs.

He has already planned for changes in the technology division. However no jobs will be cut and none of the German branches will be closed, the CEO said.

Joussen is optimistic regarding the industry in general. The overall share of mobile phone minutes might increase to over 30% mid-term from 16% in 2005, at the expense of fixed line minutes, he said.

The company is well on track with its strategy to win over customers from fixed line providers, he said. Especially "at home" products, where customers have cheaper tariffs if they are at home, are a major part of this strategy, according to the CEO. "We see an explosion of customer growth, which exceeds our expectations by far," Joussen said.

Company Web site: http://www.vodafone.de

-By Stefan Paul Mechnig, Dow Jones Newswires; +49 69 29 725 500, stefan.mechnig@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 28th April 2006