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2010

Vodafone

International
Academy
of Shrikant Kumar
Management PGPM/0911/026
& 2009-2011
Entrepreneurship
CONTENT
INTRODUCTION
VISION
PASSION
TURN OVER OF THE COMPANY
HISTORY
MILESTONE
BUSINESS MODEL
ORGINATION STRUCTURE
MARKETING ANALYSIS
PRODUCT PROFILE
TARGET CUSTOMER
POSITIONING STRATEGY
MARKET SHARE OF COPETATIORS
FINANCIAL ANALYSIS
Vodafone Current Ratio
Vodafone total asset turnover ratio
Vodafone Debtors' Turnover Ratio
VALUE CHAIN
OUT OSURCING
QUALITY MANAGEMENT
SWOT
FUTURE OUTLOOK

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VODAFONE
Vodafone Group plc is a British multinational mobile network
operator headquartered in Newbury, Berkshire, United Kingdom.
Vodafone is the world's largest mobile telecommunication network
company, based on revenue, and has a market value of about £71.2
billion (November 2009). It currently has operations in 31 countries
and partner networks in a further 40 countries. Based on subscribers,
it is the world's second largest mobile phone operator behind China
Mobile, with over 427 million subscribers in 31 markets across 5
continents as of 2009. In the UK, its home ground, Vodafone has
badly underperformed in the last few years due to brisk change in
administration. It has slipped from first to third largest telecom
operator generating revenue of £4.9 billion from its 18.7 million
customers in 2008-09. As of March 31, 2009, the company employs
more than 79,000 people worldwide.
“The name Vodafone comes from voice data fone, chosen by the
company to "reflect the provision of voice and data services over
mobile phones.”

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OUR VISION
To enrich our customers‟ lives through unique power of mobile communication.

OUR PASSION
•1. FOR CUSTOMERS:

In anticipation of their customers‟ trust Vodafone understands their needs &


delights themes‟ with its services.

•2. FOR OUR PEOPLE:


Outstanding people working together make Vodafone exceptionally
successful.

•3.FOR RESULTS:
Vodafone believes in being action oriented & is driven by a desire to be the
BEST.

•4. FOR THE WORLD AROUND US:


Vodafone believes helping people of the world to have fuller lives through
their services & its impacts.

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Turn Over OF the Company
In Millions of GBP (except for per share items) 6 months ending 2009-09-30

Revenue 21,761.00
Other Revenue, Total -
Total Revenue 21,761.00
Cost of Revenue, Total 14,115.00
Gross Profit 7,646.00
Selling/General/Admin. Expenses, Total 4,057.00
Research & Development -
Depreciation/Amortization -
Interest Expense(Income) - Net Operating -
Unusual Expense (Income) 0
Other Operating Expenses, Total -157
Total Operating Expense 15,693.00
Operating Income 6,068.00
Interest Income(Expense), Net Non-Operating -948
Gain (Loss) on Sale of Assets -
Other, Net -7
Income Before Tax 5,747.00
Income After Tax 4,795.00
Minority Interest 25
Equity In Affiliates -
Net Income Before Extra. Items 4,820.00
Accounting Change -
Discontinued Operations -
Extraordinary Item -
Net Income 4,820.00
Preferred Dividends -
Income Available to Common Excl. Extra Items 4,820.00
Income Available to Common Incl. Extra Items 4,820.00
Dilution Adjustment -
Diluted Weighted Average Shares 5,276.00
Diluted EPS Excluding Extraordinary Items 0.91
Diluted EPS Including Extraordinary Items -
Dividends per Share - Common Stock Primary Issue 0.27
Gross Dividends - Common Stock -
Net Income after Stock Based Comp. Expense -
Basic Normalized EPS -
Diluted Normalized EPS 0.91

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History
Vodafone was formed in 1984 as a subsidiary of Racal Electronics Plc. Then
known as Racal Telecom Limited, approximately 20% of the company's capital
was offered to the public in October 1988. It was fully demerged from Racal
Electronics Plc and became an independent company in September 1991, at
which time it changed its name to Vodafone Group Plc.

Following its merger with Air Touch Communications, Inc. („Air Touch‟), the
company changed its name to Vodafone Air Touch Plc on 29 June 1999 and,
following approval by the shareholders in General Meeting, reverted to its
former name, Vodafone Group Plc, on 28 July 2000.

1982: As Racal Telecomm, awarded the first mobile license in the UK


1985: First mobile analogue call in the UK
1987: Launched Vodapage, a paging network covering 80% of the country
1988: Listed on the stock exchange
1991: Separated from Racal Electronics and since then quoted as Vodafone
1993: Introduction of digital mobile services in the UK and first international
partnership.
1999: Merged with Air Touch Communications, producing a new company,
Vodafone Air touch plc
2000: Began operating as the Vodafone group Plc
2002: Introduced Vodafone Live!
2004: Commercially launched its 3G services in Europe
2005: Launched fixed mobile convergence product in Germany called Zuhause.
2006: Sold its Japanese unit to Softbank and Swedish unit to Telenor.
2007: Acquired controlling interest Hutchison Essar Limited in India; acquired
Tele2 fixed line operations in Italy and Spain.

Key milestones in the development of Vodafone


2005
December Vodafone announces completion of acquisition of 10% economic
interest in Bharti Tele-ventures in India Vodafone will be McLaren
Mercedes Title Sponsor Acquisition of the assets of Telsim in Turkey
Vodafone launches global Mobile TV Sir John Bond succeeds Lord
MacLaurin as Chairman.
November Vodafone announces new football sponsorship with the UEFA
Champions League.
October Sale of Vodafone Sweden Acquisition of a 10% economic interest in

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Bharti Tele-Ventures in India.
July Vodafone reaches 165 million proportionate customers Vodafone
announces new four year sponsorship of the England Cricket Team
May Vodafone completes acquisition of control of MobiFon in Romania and
Oskar in the Czech Republic
 Vodafone launches Vodafone Simply
January Vodafone reaches 150 million customers - strongest quarter since
December 2000

2006
December Sale of 25% stake in Switzerland's Swisscom.
November Competition of sale of 25% stake in Belgium's Proximus.
September Vodafone launches first Vodafone-only branded 3G consumer
handset Vodafone reports 10 million Vodafone Passport customers
Vodafone to deliver fixed-line broadband services in the UK.
June Proposed Return of Capital via a B share scheme announced .
May Vodafone announces completion of acquisition of the assets of Telsim in
Turkey Vodafone and Softbank agree to form mobile partnership.
April Completion of sale of Vodafone Japan to Softbank .
March The number of Vodafone live! customers with 3G reached 10 million.
February Impairment review and update to outlook .
January Completion of sale of Vodafone Sweden.
2007
December A consortium led by Vodafone Group is awarded the second
mobile phone license in Qatar Indus Towers Limited, an independent
tower company in India is formed between Vodafone, Idea and Bharti .
October Vodafone agrees to acquire Tele2 Italia SpA and Tele2
Telecommunication Services SLU from Tele2 AB Group.
May Vodafone announces completion of the acquisition of Hutch Essar from
Hutchison Telecommunications International Limited Vodafone launches
first ultra-low cost handsets.
February Safaricom, Vodafone's partner in Kenya announces the launch of M-
PESA, an innovative new mobile payment solution that enables customers to
complete simple financial transactions by mobile phone Vodafone agrees to buy
a controlling interest in Hutchison Essar Limited, a leading operator in the fast
growing Indian mobile market Vodafone announces agreements with both
Microsoft and Yahoo! to bring seamless Instant Messaging (IM) services to the
mobile which can be accessed from both the PC and mobile handsets Vodafone
signs a series of ground-breaking agreements which will lead to the mobilising
of the internet. YouTube agrees to offer Vodafone customers specially rendered
YouTube pages on their mobile phones. With Google, Vodafone announces its
intention to develop a location-based version of Google Maps for. With eBay,

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Vodafone announces it is to offer the new eBay mobile service to customers,
With MySpace.com Vodafone
2008
December Vodafone completes acquisition of additional 4.8% stake in
Polkomtel .
November Vodafone to acquire an additional 15% Stake in Vodacom Group
which will increase Vodafone's shareholding from 50% to 65%.
Vodacom Group will be listed on the Johannesburg Stock Exchange and
the remaining 35% of Vodacom Group will be demerged by Telkom to
its shareholders.
October Vodafone launches the new exclusive BlackBerry® Storm™
smartphone from Research In Motion.
August Completion of the acquisition of a 70 percent stake in Ghana
Telecom.
July Vittorio Colao succeeds Arun Sarin as Group Chief Executive Vodafone
acquires a 70% stake in Ghana Telecom for $900 million.
June Vodafone and Apple(R) announce the iPhone 3G will be available in
Australia, Italy, New Zealand and Portugal on July 11, and in the Czech
Republic, Egypt, Greece, India, South Africa and Turkey later this year.
Vodafone announces that Verizon Wireless, its affiliate in the US, has
agreed to acquire Alltel Corp. for a total enterprise value of US$28.1
billion in cash and assumed debt.
May Vodafone announces that it has agreed to acquire the 26.4% interest in
Arcor that it does not already own from Deutsche Bahn AG and Deutsche
Bank AG for a cash consideration of €474 million.

2009
June Completion of merger between Vodafone Australia Limited and
Hutchinson 3G Australia Pty Limited.
March Telefonica and Vodafone announce milestone Pan European
collaboration to share network infrastructure in Germany, Spain, Ireland
and the UK.
February Hutchinson and Vodafone agree to merge Australian telecom
operations to form a 50:50 joint venture.
January Vodafone trials HSPA+ mobile broadband at speeds of up to 16 Mbps.

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Business models

Access to communications in emerging markets


Our research demonstrates that the needs of customers in emerging markets can
be quite different from those in developed markets. This means we need to
adopt different business models – affecting network development, customer
service and price plans – according to local needs and what customers can
afford. These are some examples of how we are tailoring our services to
emerging markets:

Pre-pay Providing flexible payment options helps to overcome credit barriers.


For example, a pre-pay business model enables people to top up the credit on
their phones as and when they need to, or are able to, rather than committing
customers to a standard monthly charge. Pre-pay options (via cards, vouchers or
electronic top-up schemes) are available in all our markets. We offer lower
denomination pre-pay cards in emerging markets, to enable poorer customers to
pay for just a small amount of call time at once.

Reverse charge (No airtime? No problem!) Reverse charge enables people to


make critical calls even when they have run out of credit. For example,
Vodacom in South Africa offers a service where contract customers are billed
for reverse charge calls made to them by family and friends.

Customer service vans for rural regions We are bringing mobile services to
rural communities in India through traveling phone shops. Vans drive from
village to village in remote parts of the country, reaching people that otherwise
would not have access to mobiles. As the vans run as a franchise, they also
provide the opportunity for local people to set up a small business.

Self-service kiosks to top up pre-pay cards Vodafone Essar operates self-


service phone kiosks in urban areas in India, which are open 24 hours a day.
The kiosks offer a convenient, affordable way to top-up and provide
information services for customers.

Free callback requests Our „Please Call Me‟ service in South Africa enables
customers to send a free text message asking the recipient to call them back,
even when the sender has run out of credit. The cost of running the service is
covered by advertising that is included alongside the „Please Call Me‟ message.
A similar service in Egypt enables customers to send up to three free „Please
Call Me‟ text messages a day as part of our Wayak initiative.

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Community phones Many people cannot afford a mobile phone but have
access to mobile services by sharing with family or friends, or through
community phone shops where you can pay per call. Community phone shops
enable affordable telecommunications in poor, rural and under-serviced areas
where there are few or no fixed line phones. In South Africa, our joint venture
Vodacom provides training and support for local people to run phone shops as a
franchise business. In India, we offer the Vodafone PCO, a phone that looks like
a fixed-line handset, but is connected to the Vodafone network. It is aimed at
entrepreneurs that can install it at their shops or homes.

Network sharing Vodafone Essar is involved in a network-sharing partnership


that aims to improve mobile coverage and quality in India, particularly in rural
areas. Vodafone has a 42% share in Indus Towers, an independent company
responsible for the construction of India‟s new mobile towers and the
maintenance of existing ones belonging to Vodafone Essar, Bharti Airtel and
Idea Cellular.

Organization structure

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Marketing Analysis
Product Profile
Company Profile will assists individual investors, managers and companies in
evaluating opportunities, trends, market innovations, and selecting appropriate
information solutions in order to make effective decisions. The report has been
made after extensive research using the data available from reliable
publications, trade associations and the companies‟ sources. The report
elaborates on the company's business structure and operations, products and
services. The report includes key financial information and strategic analysis
that intends to aid investors to find better prospects with the company and gain
an insight into the corporate policies.

Target Customers
Positioning Vodafone as a younger, more dynamic network, based on brand
personality and attitude, would have greater appeal for Vodafone's core 18 to 39
age target.

Positioning Strategies
First brand in the category to develop a personality-based brand positioning.
Positioning Vodafone as a younger, more dynamic network, based on brand
personality and attitude, would have greater appeal for Vodafone's core 18 to 39
age target.
It would also further encourage the perception that Optus was moving in the
direction of Telstra's older, more conservative position.

Market Share of each competitors

Customer Market Share(%)


AIRTEL 32466 22.8
Reliance 29980 21.1
BSNL 25551 18.0
VODAFONE 23306 16.4
IDEA 12442 8.8
TATA 10249 7.2
AIRCEL 4513 3.2

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FINANCIAL ANALYSIS

Vodafone Current Ratio


Work through the data for Vodafone and calculate their current ratio for the two
years for which you have data.

Vodafone 31 March 31 March


Consolidated Balance Sheet 2002 2001
£m £m
Total Current Assets 9,438 18,182
Creditors: Amounts falling due within one year 13,455 12,377
Fill in this table and discuss what you find:

Current Ratio For Vodafone


31 March 2002 Current Assets: Current Liabilities _____: ___: 1
_____
31 March 2001 Current Assets: Current Liabilities _____: ___: 1
_____
Vodafone has done almost the exact opposite of the Carphone Warehouse with
its current ratio.

This additional information might help your analysis.

Current assets 2002 £m 2001 £m


Stock 513 316
Debtors due within one year 7,053 4,587
Short-term investments 1,792 13,211
Cash at bank and in hand 80 68
Total Current Assets 9,438 18,182
Creditors: Amounts falling due within one year 13,455 12,377
Net current assets (liabilities) -4,017 5,805

Vodafone has liquidated, or sold, many of its short-term investments. This


business has grown at a very rapid rate and has possibly used the cash from
having sold its investments to finance that expansion. Overall, Vodafone has
lost almost £10 billion of working capital as it has fallen from £5.8 billion to -
£4.0. This has left Vodafone in a weak working capital position as its creditors
are large but its cash and short-term assets balances are small by comparison.

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Vodafone total asset turnover ratio
Let's see what we find when we analyse Vodafone's total asset turnover ratio.
Go to the database and find the data you need for these calculations then
calculate the total asset turnover ratios and tell us what you have found.

Did you think these were terrible results? Me too! Especially when we compare
it with the Carphone Warehouse's results which were 1.56 and 2.57 for its latest
two years respectively - significantly better than Vodafone's turnover ratio
results.

History shows us Vodafone's total asset turnover ratio looks like this:

Vodafone plc 2002 2001 2000 1999 1998


Total Asset Turnover Ratio 0.14 0.09 0.05 0.91 0.96
It's been terrible for three years now, but it might be that 2001 was the worst
year.

Vodafone Debtors' Turnover Ratio


Vodafone is consistent... consistently terrible when compared with the
Carphone Warehouse. Can it really be true that a mobile telecommunications
business waits three months for its debtors to pay their accounts? After all, the
demand for mobile phones is such that Vodafone can insist on its payment
terms can't they? Here's some additional information taken from Vodafone's
annual report that will help us to sort this mess out!

2002 2001
Debtors due within one year: £m £m
Trade debtors 3,389 1,852
... ... ...
Total Debtors 6,095 3,701

Do what the financial analyst did for the Carphone Warehouse and rework the
debtors' turnover ratio and find the length of time that trade debtors take to pay
their accounts ... is it more sensible and realistic than three months?

Put the data into the same format as before:

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Vodafone 31 Mar 2002 31 Mar 2001
£m £m
Turnover 22,845 15,004
TRADE Debtors due within one year 3,389 1,852

Debtors Turnover Ratio for Vodafone


31 March 2002 3,389 54.15 days
22,845 ÷ 365
31 March 2001 1,852 45.05 days
15,004 ÷ 365
A lot better and much nearer to what we should expect and ... still a lot longer
than the Carphone Warehouse. Try to find out what is it about Vodafone that
makes their Trade debtors payment terms so generous when compared with the
Carphone Warehouse.

Remember that we talked about the liquidity of debtors when we discussed the
acid test ratio. Now we can see that the Carphone Warehouse's debtors are not
that liquid.

VALUE CHAIN
We spend more than £2 billion on goods and services from suppliers every year
including handsets, network infrastructure, IT, general and marketing services.
We have over 1,550 suppliers worldwide.

Our reputation as a responsible business is dependent on suppliers meeting high


environmental and labour standards. We assess all our suppliers regularly to
identify potential corporate responsibility risks and use our influence to
encourage them to improve their performance.

There is always the possibility that some companies in our supply chain may
not meet acceptable standards on the environment or human rights. We adopt a
risk-based approach – concentrating on suppliers who present a higher risk of
unethical conduct due to their location, the type of product or service they
supply, or the size of their contract with Vodafone.

Our main focus is on tier 1 suppliers (those with whom we deal directly) but we
can influence standards further down the supply chain by:encouraging suppliers
to develop their own supply chain programmes participating in the Global e-
sustainability initiative, an industry collaboration.

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Many larger suppliers also work with other Vodafone operating companies, so
much of our supplier engagement is carried out at Group level. Code of Ethical
Purchasing Our Code of Ethical Purchasing (CEP) describes the standards that
companies must meet if they are to be a part of the Vodafone UK supply chain.
It is included in all our supplier contracts.

The Code is base on Group values and international standards set by the United
Nations and the International Labour Organisation. It covers issues relating to
human rights, working conditions, the environment and corruption.

We may terminate a contract with any supplier that breaks the Code, depending
on the severity of the incident.

Supplier performance management Corporate responsibility is one of six


criteria we use to select suppliers and monitor their performance. The other
criteria are financial and commercial as well as issues surrounding technology,
quality and delivery.

We conduct risk-assessments and, where necessary, on-site evaluations for new


and existing suppliers to identify any CR risks and possible areas of non-
compliance with the CEP. Our employees are also trained to spot any signs of
non-compliance with the CEP whenever they are on site for other reasons such
as quality assessments.

All new suppliers with a contract value over €10,000 will complete a
preassessment. These assessments help us to determine higher risk suppliers
with whom we need to engage more closely.
Our top 50 suppliers (by spend and business impact) are re-assessed every six
months and improvement plans agreed where necessary.
Engagement with higher risk suppliers is carried out at Group level and may
include on-site assessments and training.

Employee awareness and whistleblowing We cannot expect suppliers to meet


high standards if our own employees do not apply our CEP consistently. It is
essential that Vodafone UK procurement staff apply our CEP consistently and
are equipped with knowledge about potential CR risks in our supply chain. We
have online CR training for all procurement staff including information on our
CEP, the importance of implementing high labour and environmental standards
in the supply chain and the responsibilities of purchasing managers.All
procurement staff have CR targets built in to their performance development
objectives.

We launched „Speak up‟, a confidential whistle blowing system in 2006/07.

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This is now incorporated in our Group-wide Duty to Report policy. This policy
is applicable to all Vodafone employees and provides suppliers with a means of
reporting concerns. Our suppliers can use Speak up to report any unethical
conduct by Vodafone employees. We wrote to over 2,000 suppliers to notify
them of this service. Suppliers can raise concerns directly to Vodafone‟s Group
Fraud Risk and Security Department or confidentially via an independently
managed telephone hotline.

Green purchasing We use our influence to encourage suppliers to provide


more products with a reduced environmental impact. This helps stimulate the
market for these goods. For example, we have purchased energy-efficient
shuttle buses for employees working at our Newbury HQ and we buy Fair Trade
coffee for our cafes.

OUT SOURCING

Vodafone has selected EDS and IBM to manage its application development
and maintenance services in a global IT outsourcing deal, as part of its strategic
commitment to reduce costs while leveraging its regional scale.

Vodafone hopes to conclude negotiations and finalise contracts with the two
outsourcing partners in the coming weeks.

Under the terms of the proposed arrangements, each outsourcing partner will
provide application development and maintenance services for key IT systems
to separate groupings of operating companies within the Vodafone Group.
Vodafone will retain full strategic control of the initiative, which focuses on
writing code for and maintaining systems such as billing and Customer
Relationship Management.

The proposed arrangements form part of Vodafone's cost reduction strategy.


Against this backdrop, Vodafone continues to stimulate revenue growth through
the roll out of new services and attractive tariffs which encourage customers to
use their mobile phones more extensively within the home and office.

Today's announcement is the result of a rigorous eight-month selection process,


which has reduced the number of candidates from 11 to two preferred
outsourcing partners, subject to final contract. Candidates were assessed against
a wide range of criteria including technical capability, outsourcing expertise,
cost and cultural fit to ensure the future success of the partnership.

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As previously announced, Vodafone has identified the potential to reduce unit
costs by 25 to 30 percent within three to five years. Activity levels on
application development and maintenance during the last financial year resulted
in a spend of around GBP560 million.

Under the plans, the number of application development and maintenance


suppliers currently used by the Group will be rationalised by the two partners,
bringing greater economies of scale. The Group also anticipates that the
initiative will result in improvements to the quality of software produced, as
well as greater flexibility, leading to the faster roll out of more varied services
to customers.

Under the proposals, the substantial majority of impacted staff are expected to
transfer to the employment of the outsourcing partners, and work from similar
locations under similar terms and conditions where possible. The remainder of
staff will be retained by Vodafone. The Group is currently in full consultation
with staff likely to be impacted by the changes.

Arun Sarin, Chief Executive of Vodafone, said: "This initiative is a good


example of how Vodafone is finding new ways to deliver greater cost
efficiencies across the business. We are exploring the possibility of outsourcing
other non-core activities so that we can focus on our customers.

"The outsourcing of this application development and maintenance work


complements a series of other projects designed to reduce Group overheads
including the regional consolidation of data centres and the centralisation of
network supply chain management.”

QUALIYU MANAGEMENT

Vodafone UK, a member of the world's largest mobile community, is


the first UK mobile operator to have successfully had its ISO 9001
registration upgraded from the 1994 to 2000 version.This British
Standards Institution quality certification covers Vodafone UK's
Quality Management System for its entire business including network
operations, sales and marketing, customer service and support
functions."Quality is the foundation of our passion for our
customers," commented Gavin Darby, Vodafone's UK Chief
Operating Officer. "We believe that the top place results achieved by
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Vodafone in OFTEL's customer satisfaction and network coverage
surveys at the end of last year were helped by our implementation of
ISO 9001." Nick Moy, Managing Director of BSI Management
Systems said: "Many organisations, such as Vodafone, are finding
that ISO 9001:2000 better connects the Quality Management Systems
with their business processes, helping them to achieve their business
objectives such as customer satisfaction and network quality."The
close partnership created between Vodafone and BSI has helped to
achieve this commendable certification. At Vodafone there is clearly
commitment to quality right through the organisation."
BSI has a wide range of resources to help firms succeed:
Communication Forums - free business-improvement events, run
throughout the UK Consultancy and training - available through BSI
Business Solutions Literature - a book, published by BSI group
company CEEM, called "ISO 9000:2000, The Route to Registration,"
is available from www.ceem.com

SWOT

STRENGTHS
Strong International presence and brand recognition. Solid platform across
Europe; HSDPA available in 100% of 3G footprint opening growth
opportunities in mobile broadband services. Controlling interest in strong
growth markets (e.g. Egypt, Romania, South Africa, Turkey, India). Well-
defined cost reduction initiatives: managed purchasing, outsourcing. Stable
operating profit despite downward profit trend in Europe offset by improved
operations in EMAPA. Have now established a clear route to delivering fixed
broadband services in all relevant markets. Consistent in maintaining a 60%
payout ratio.

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WEAKNESSES
Uncertainty in revenue growth in the HSDPA network based on historislow
consumer market take-up of 3G data services. Slow customer growth in DSL
wholesale markets in UK and Italy; slow subscriber growth in Spain arising
from lower promotional activity. Adverse impact from exchange rate
movements particularly in South Africa. The likely slippage of dividends in
Verizon Wireless to 2010 could fuel tension §between Verizon
Communications and Vodafone shareholders. Have now established a clear
route to delivering fixed broadband services in all relevant markets
Insubstantial capacity to offer bundled services due to specialization in mobile
services; may lead to higher churn rates and may be pressured to compete
exclusively in price.

OPPORTUNITIES
EMAPA remains target for potential acquisitions, with an average mobile
penetration of 27% by end of FY07 ; huge growth opportunity in India in a
market of 1.1 bn people with a low 14% mobile penetration 3G data services
gaining momentum in business customers; successful partnerships with laptop
manufacturers to include embedded Vodafone SIMs to mobile devices allow
opportunities for upselling of mobile broadband services in Europe, only one-
third of voice traffic is carried over mobile networks and Vodafone customers
has a monthly average of only 140 minutes of use; the trend is parallel with the
company‟s strategy to drive higher voice usage onto mobile through reduction
in prices; Vodafone expects usage demand to eventually exceed the price
reduction.

THREATS
High mobile penetration in principal market leaves little room for growth
Fierce competition in mature markets, especially with converged telcos offering
triple-play and quad-play services; Vodafone lacks a direct substitute for such
services Greater than anticipated competition with internet providers, MVNOs
and new entrants; greater than anticipated customer acquisition and retention
Regulatory intervention on tariffs creates pressure on revenues; on FY08, the
company expects a revenue reduction of £200 mn due to the elimination of top
up charges under the Bersani decree in Italy and reduction of £200 mn to £250
mn from the deregulation of roaming charges across Europe .

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FUTURE OUTLOOK

Vodafone's plans to revamp Internet services critical


to future success
Faced with being labeled as little more than a dumb pipe, Vodafone is expected
to announce a significant overhaul of its mobile Internet service. The move will
see the Live! Brand replaced with Vodafone 360, with a focus on social
networking and mobile payment services.
The company, which has been increasingly viewed as having fallen behind
rivals such as Apple and Google in mobile services, hired Pieter Knook from
Microsoft last year to head its mobile internet group and devise a new strategy
for Vodafone.
The plan will see the company improve access to social networking sites,
providing subscribers with the chance to integrate several social networking
sites on their mobiles, so they can see what their friends are doing without
having to switch between different applications. Included within this new
strategy will be a move into using the billing relationship that Vodafone has
with its customers to help them purchase apps and other content without the
need for a credit card and the associated risk of online fraud. The company
CEO, Vittorio Colao, gave his blessing to this approach, commenting that "I
truly believe mobile accounts are a fantastic payment platform for all digital
goods."
The challenge Vodafone has set itself has to be seen in the light of its lack of
success with past attempts to turn consumer-focused mobile Internet services
into a large revenue generator. Terence Sinclair, an analyst at Citi, estimates
that 10 per cent of the company's £3.1 billion of data revenue in 2008-09 came
from services such as music downloads, and a further 10-15 per cent came from
e-mail. Sinclair added that about 75 per cent of Vodafone's data revenue
consisted of monthly charges for providing basic access to the wireless Internet.

CONCLUSION
•Taken steps to make a positive difference, by supporting recycling
campaigns
•Win-win-win situation for shareholders, employees & the
environment
•Improved relationships between stakeholders & has helped to ensure
future growth

20 | P a g e