Germany's "Frankfurter Allgemeine Zeitung" on Tuesday quoted Vodafone Germany chief Jens Schulte-Bockum as saying in a letter to executives that the firm would have to cut 500 jobs in Germany to increase its competitiveness.

The report said the company needed to adjust to harsher competition and lower fees in Europe's largest economy.

"We have started a two-year program to this effect," Vodafone confirmed in a statement. "We have to make the company fit for the future."

Difficult market environment

Apart from slashing jobs, Vodafone said it would shift some of its operations to Romania and India, adding that areas such as network technology and customer service would be affected.

Jens Schulte Bockum complained about starting wages in Germany being too high, saying the company could no longer afford them. He announced that Vodafone would create special new service units for customer support in a bid to change salary structures. But it added that wages of current employees would not be affected.

In Germany, Vodafone has been suffering from low-price offers for smartphones from Deutsche Telekom's T-Mobile unit and a ruling by regulators lowering the fees mobile operators can charge for calls coming from other networks.

hg/kms (Reuters, AFP)