Vodafone (NYSE: VOD) confirmed today that it will cull 500 job from its UK operations, a move that represent around 5 percent of its UK staff and is part of its cost cutting drive to save £1 billion ($1.4 billion) by 2011. According to BBC News, all of the unit’s operations will be hit, including 170 back-office roles at Vodafone’s head office in Newbury, Berkshire and some of its call centers.

The company said in a statement that the “reductions to its operating costs” were necessary “for it to compete more effectively in the UK market. The UK operation—which counts 19 million British customers—was always under threat once the cost savings were announced, as the unit underperforms in terms of margins compared to the global operator’s other country units.  Vodafone UK had an EBITDA margin of 23.2 percent in the six months ended September compared to 44 percent in Germany and 44.9 percent in Italy.