Vodafone Group Plc plans to drive down its annual costs by 2.5bn pounds ($4.5bn) by March 2008 when capital expenditure will be less than 10% of revenue.
At the same time, the company, which is under fire for failing to acquire AT&T Wireless in February, is still looking for possible acquisitions.
Chief executive Arun Sarin told analysts that the company was looking to extend its interests in eastern Europe and in French mobile phone firm SFR, where it has a 44% stake but which is controlled by Vivendi Universal
Other target areas for the company are Asia and Africa, where there is low mobile phone penetration. Sarin cautioned: But what I want to give you comfort on is that we have strict hurdle rates. The risk in one country is not the same as the risk in another country.
Sarin is treading a difficult line between between being sufficiently acquisitive to fuel future growth and having to placate a conservative financial establishment which is keen to see the company dishing out a substantial portion of the cash it generates to investors. He said the company intends to pay out more and more of its cashflow in the coming years.
The US remains the biggest dilemma for the company, which holds a 45% stake in Verizon Wireless, which is controlled by its partner Verizon Communications Inc.
Sarin acknowledged that both parents would like to own more of the asset.