Vodafonewatch Report #93 July-August 2011 Executive Brief
31 August 2011
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- GROUP: Decoding Vodafone’s Q1 management update made for a thankless task, finely balancing promise and alarm. Regions were divided: Europe between a sprightly north and a depressed south, AMAP powered by emerging markets but shackled by Tasmanian turmoil. Exchange rates propped up Europe, but crimped AMAP. Underperforming OpCos may be perking up, as powerhouses lose momentum. This all comes before factoring in investor panic over the dangers of Internet Protocol and over-the-top (OTT) data services cannibalising lucrative voice and messaging revenue, and a backdrop of wider global economic mayhem. The deciding indicator could be Vodafone’s own innately cautious executives, who felt confident enough to reiterate financial guidance for the full fiscal year, fuelled by a two- to three-year smartphone and associated mobile data bonanza. [pp.4-16.]
- The cannibalisation threat of OTT service usage remained a prominent OpCo talking point in the results presentation, coming with Vodafone Netherlands announcing mobile data tariff rises in response to the country’s introduction of internet neutrality regulations in June 2011. [pp.7, 8, 42, 43.]
- In India, the Group sold a 5.5% stake in Vodafone Essar to pharma group Piramal Healthcare, enabling Vodafone to claim continued compliance with foreign ownership rules, following its ongoing buyout of Essar Group. The move also gives Vodafone a lower-maintenance and short-term junior partner to hold things in place until a wider ownership overhaul expected in 2013, as well as strongly hinting that additional value will be ‘discovered’ over this period. [pp.17, 18.]
- Vodafone confirmed it is to gain a timely cash flow boost later in FY 10-11 with receipt of a $4.5bn (£2.8bn/EUR3.2bn) dividend from US associate Verizon Wireless — ending partner Verizon Communications’ restriction of cash outflow from the mobile operator since 2005. The Group continued to develop improving relations with Verizon by appointing Vodafone UK Chief Technology Officer Jeni Mundy to a global Director of Products and Innovation role, where she will act as a go-between for the two companies’ collaboration programme. [pp.19, 20.]
- A string of senior-level executive changes were announced by several Group OpCos – both in the form of: secondary reshuffles by the numerous new in-country Chief Executives who have been appointed in the last year; and further top-level changes by the Group, as challenges remain evident across several markets. Group fixed-line luminary Diego Massidda joined Vodafone Hungary as Chief Executive, in a potential harbinger of expansion ambitions at the troubled OpCo, while Partner Markets Head Richard Daly returned to the Arab world as Chief Executive of Vodafone Qatar. Vodafone Egypt, Vodafone Qatar, and Vodafone Romania also saw further changes in C-level positions. [pp.20-23.]
- Group activity continued to bubble away around near-field communication (NFC) services, with Vodafone reported to be working with rival European operators on the creation of a new logo for marketing the contactless transaction technology; and Vodafone Germany and Vodafone Hungary signing the latest in a string of cross-operator partnerships on NFC service rollout. [pp.23-25.]
- Vodafone extended its global relationship with Norwegian browser developer Opera Software as the Group continues to focus on galvanising data usage in emerging markets, particularly India. [p.30.]
- EUROPE: Vodafone Czech Republic is said to be in talks with rivals Telefónica Czech Republic and T-Mobile Czech Republic over a Long Term Evolution (LTE) infrastructure sharing deal, as signs continue to emerge of greater interest by Vodafone in outsourcing and other collaborative arrangements around next-generation wireless and wireline network rollout. [p.35.]
- Vodafone Hungary is to face additional competition after the country’s government confirmed plans to auction new 900MHz spectrum later in 2011. [p.40.]
- Vodafone continued its policy of “selective” and accretive in-market takeovers with news that Vodafone Turkey is to buy domestic telecoms and IT services player Koç.net, prospectively more than doubling its fixed-line revenue, and supporting ongoing enterprise expansion ambitions. Vodafone Netherlands secured clearance for the acquisition of mobile retailer BelCompany it announced in March 2011. [pp.43, 48, 49.]
- Vodafone reiterated warnings to governments over pricing of new spectrum, amid the prospect of sizeable outlay on frequency resources in the coming months and years. Vodafone Spain became the second Europe Region OpCo to gain new ‘digital dividend’ frequencies, while India and Italy sought to push forward potentially chaotic similar spectrum sales. [pp.46, 47, 55.]
- AFRICA, MIDDLE EAST, AND ASIA-PACIFIC: Emerging markets OpCos furthered ambitions to push beyond mobile voice, with Vodafone Ghana’s new Vodafone Business Solutions releasing a Wireless Office facility for corporate customers, and Vodafone Qatar announcing a provisional agreement to interconnect with the emirate’s National Broadband Network. [p.54, 58.]
- Vodafone Egypt continued to appear off-balance or worse, following the country’s recent political upheaval and the OpCo’s recent performance downturn: inviting further criticism over its enforced network shutdown during Egypt’s revolution via another misdirected advertising campaign. It also remains subject to a murky regulatory outlook on issues such as mobile virtual network operator liberalisation — key to the Group’s relationship with local junior partner Telecom Egypt. [p.51.]
About Vodafonewatch
Report: #93
Covering: July-August 2011
Published: August 2011
Next report: September 2011
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