By Zeba Fatima

Vodafone Australia is embarking on a major cost-cutting program that will result in across-the-board job losses as it strives to boost its sales performance.

In an internal memo sent to staff yesterday, Vodafone chief executive Nigel Dews said a major business restructure was necessary to contain costs and help it become a "financially strong, profitable and sustainable business".

"While we had a good, strong December for sales and while we are making positive progress, we fell short of our revenue growth aspirations," Dews said.

"The opportunity to further strengthen our position in this highly competitive market is still great; it's just going to take a bit longer than we originally planned. This means we have settled on a revised budget for 2012 that reflects the fact that although we are growing again, we need to make some changes," he said.

Those changes will see Vodafone combine its sales and marketing units into a single operation to be headed by the company's sales boss, Noel Hamill.

Vodafone's corporate communications unit will also be absorbed into the new consolidated unit. The restructure has already claimed its first scalps, with the roles of Vodafone's veteran marketing chief John Casey and long-serving director of communications and corporate affairs Tanya Bowes being made redundant.

More redundancies are set to follow as Dews warned of reductions in the size of the company's executive team, which would affect its ranks of general managers and divisional heads.

"There will be flow-on effects from these changes throughout most functions across the company which will include redundancies and changes in roles," Dews said.

The bid to contain costs comes at a critical time for Vodafone, which is under intense financial pressure after investing $1 billion to upgrade its mobile network. The company has been scrambling to find enough capital to renew its 15-year mobile spectrum licence, which expires this year. The government has flagged that renewal could cost as much as $678 million.

"We need a smaller cost base from which to continue to build a financially strong, profitable and sustainable business at the same time as we continue to invest heavily in the network and vital spectrum assets," said Dews.

Although Vodafone said it was exploring new opportunities for redundant executives, the fact that such long-serving employees have been axed has sent shockwaves through the company.

Dews said in his memo that Vodafone had experienced a "strong December for sales", but recent CBA analysis forecast the company had increased net customer additions by only 1000 for that quarter. For the same period, CBA estimated that Telstra had 342,000 net additions while Optus brought in 115,000 additional customers.