Vodafone, the world's biggest mobile phone company, today doubled its cost-cutting target to £2 billion over the next two years as it fights against stiff competition and falling call costs.

Chief executive Vittorio Colao said that his original target of slashing costs by £1 billion by 2010 would now be reached in the current year, so he set a new target for a further £1 billion of savings by 2012. He said most of this would come from better purchasing power, more network sharing and efficiencies.

The news came as Britain's third-largest company by stock market value revealed a 3% fall in like-for-like revenues in its first half but said it was still on target to make operating profits of between £11 billion and £11.8 billion for the year to next March. Vodafone's first-half profits rose 2.4% to £5.9 billion.

Colao admitted that India remained one of Vodafone's toughest markets.

He said: “Following the recent launches of a number of new entrants competition is intense and will remain so for some time.”

But he added that the country is still one of the most attractive for mobile growth and should benefit from consolidation among players in the market. In Europe revenues continue to slow faster than in emerging countries falling 4.5% in the first half.

Vodafone lost out to O2 on the launch of the iPhone in the UK where it will only start offering the best-seller after Christmas.

Colao said customers were already pre-ordering the iPhone in Vodafone shops.