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Vodafonewatch Report #87 November-December 2010 Executive Brief

14 December 2010

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Executive Brief from Vodafonewatch, report #87. Click through for: an Extract from this month’s report; the Report Snapshot; or to contact us for more information about the full 90-page report, this industry standard monthly report service, and ongoing subscription access.

  1. GROUP: Vodafone’s H1 FY10-11 financial results were received well, with the Group: continuing to revive overall revenue growth; further enlarging contribution from data services; raising profit and revenue guidance; and building success stories out of previous embarrassments, particularly in the case of Vodafone Turkey (which grew fastest of any OpCo in the six months), and Vodafone UK (the largest OpCo to record both profit and revenue growth). The results were not problem free, however, with concerns over: continuing weakness among Southern Europe OpCos, including one time standout performer Vodafone Italy; overall fixed line malaise; and a sequential Q2 drop in revenue from the Asia Pacific and Middle East region. [pp.4-15-38,39,44,50,51,53,54, 56-59,72,73,76,77.]
  2. As expected, Group Chief Executive Vittorio Colao used the results to detail strategic priorities for coming years, again seeking to woo investors by pledging to prioritise the “value”, rather than “strength”, of Group assets. Interestingly, Colao appeared to dampen focus on Total Communications, making it subservient to the Group’s new Supermobile maxim, and stating that mobile dominates Vodafone’s “DNA”. Smart pipe was also a noticeably quiet area. [pp.16-19.]
  3. Vodafone sold leftover interests in Japan’s SoftBank Mobile (formerly Vodafone Japan) for a higher than expected £3.1bn (EUR3.7bn): enabling further balance sheet strengthening; helping rebuild investor relations; progressing its ‘value’ oriented strategic approach to international investments; and, ironically, benefiting from SoftBank’s better performance since the Group relinquished ownership. The deal brings Vodafone’s number of major remaining non controlled assets down to four, although the prospect of imminent further reduction appears dim. Separately, Jeroen Hoencamp, recently appointed Chief Executive of Vodafone Ireland, predicted consolidation in the country’s mobile market, saying that the ‘likelihood is we will have two main operators”. [pp.20-23,48,49.]
  4. Vodafone lost one of its most dynamic, emerging market ‘pioneers‘ after Grahame Maher, most recently Chief Executive of Vodafone Qatar, sadly passed away. [p.28.]
  5. Renee James became the second recent senior Intel recruit by Vodafone, taking Simon Murray’s vacated non executive directorship in a move that will add timely software development and virtualisation expertise to the Group’s Board. [p.28.]
  6. Liliana Solomon, Chief Executive of Vodafone Romania, moved up to a Director of Operations role in the Group’s recently expanded Europe Region, helping regional Chief Executive Michel Combes handle assimilation of economically challenged OpCos in Eastern Europe. Iñaki Berroeta moves from Vodafone Malta to replace Solomon. [p.29.]
  7. Tax remains, as ever, a burning issue for Group Finance, with various problems rearing up across the Vodafone footprint. “Crisis tax” plans by the Hungarian government prompted criticism from Vodafone Hungary, and appear to be causing jitters at Group level over prospects that the idea will spread. Meanwhile, in the UK, Vodafone outlets were targeted by a wave of protests over its recent controlled foreign companies tax settlement with the government; and Vodafone’s protracted Indian capital gains tax issue is seemingly nearing finality in 2011, as the Group’s government relations there tense up. [pp.32,48,60,61,73.]
  8. Multinational corporate arm Vodafone Global Enterprise continues to expand its international empire, and Group influence, via a new OpCo and Partner Market outreach programme called VGE Lite. [p.26.]
  9. Hewlett Packard is among suppliers pushing recruitment for their Vodafone accounts, seeking to boost support for its Personal Systems Group sales and work on Vodafone UK’s web presence. [p.34.]
  10. Various Group businesses began rolling out smartphones based on Microsoft’s new Windows Phone 7 operating system, as Vittorio Colao, Chief Executive of Vodafone, expressed “hopes” that the new platform will add much needed competition to the likes of Apple and Google, and aid the Group’s now horizontally aligned Vodafone 360 proposition. [p.35.]
  11. EUROPE: Several in country Europe Region vendor contracts emerged from the Group’s procurement pipeline, including deals for: Accenture/IBM (customer care); Good Technology (device management); Infradata (RADIUS); MITIE (facilities management); Synchronoss (enterprise device activation); and Systems Mechanics (service assurance). [pp.43,46,49,52,62,63.]
  12. Vodafone Albania gained a local head start in 3G after acquiring the country’s first and as yet only WCDMA licence, and embarking on an 18 month rollout programme. [p.43.]
  13. Network sharing remains very much on the Group’s agenda, with arrangements being mooted among Long Term Evolution players in Germany, and France’s SFR agreeing to collaborate with rivals on HSPA+ radio access network rollout. Meanwhile, wide scale enhancement of the Group’s mobile broadband infrastructure continues, with Vodafone Portugal deploying Dual Carrier HSPA, Vodafone Hutchison Australia detailing further 3G network expansion, and Vodafone New Zealand preparing launch of HSPA+ MIMO technology. [pp.40,45,52,64,78.]
  14. Vodafone Germany has tied with Google to market the web service provider’s Google Apps cloud computing solutions, expanding Group software as-a service focus outside of existing resale arrangements with rival Microsoft. [p.45.]
  15. Turnaround efforts at Vodafone Turkey have again been lauded by senior Group management, after the one time basket case OpCo grew revenue faster than any other during H1 FY10-11. Meanwhile, an intriguing series of recent quiet, behind the scenes discussions between Vodafone and the Turkish government continue, with Binali Yildirim, Turkey’s Minister of Transport, visiting Newbury. [pp.56,57.]
  16. In the UK, licensing news was mixed for the Group, with regulator Ofcom clearing Vodafone UK to roll out 3G connectivity across 900MHz spectrum, but, in draft legislation, laying out a proposed timetable for the delayed redistribution of 800MHz and 2.1GHz frequencies that may not see the airwaves come into operators’ hands until late 2013. [p.59.]
  17. AFRICA, MIDDLE EAST, AND ASIA PACIFIC: Reports continue to suggest that Vodafone’s Egyptian partner Telecom Egypt is “close” to forming a mobile virtual network operator business that could at least partially ease recent tensions over the incumbent’s limited ownership of Vodafone Egypt. [p.65.]
  18. Alan Harper, one time Group Strategy and New Business Director, spoke to Vodafonewatch about new venture Eaton Towers and emerging passive infrastructure outsourcing activity in Africa. [pp.66,67,69-71.]
  19. Vodafone Essar is considering extending dynamic voice discounting previously deployed by Safaricom and Vodacom, pointing to improved cooperation between Group emerging market OpCos following their congregation into one operating region. Vodafone Qatar also augmented emerging market value added service activity with the launch of a cross border mobile money remittance tie up with Filipino operator Globe Telecom. [pp.75,80.]
  20. Vodafone New Zealand continues to be thwarted by technical issues, with the latest problem hitting 3G subscribers’ data and voice connectivity. [p.78.]
  21. Vodacom Group appears to have recovered some form, following setbacks during the economic downturn, revitalising profitability, and mooting renewed appetite for acquisitions in Africa. Enterprise arm Gateway Business Africa also tied with Group US partner Verizon Communications on regional connectivity provision, adding further competition for corporate customers on the continent — including, seemingly, between several Vodafone Group operations. [pp.81-84.]

About Vodafonewatch

Report: #87
Covering: November-December 2010
Published: December 2010
Next report: January 2011

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Written by AB · Filed Under Vodafonewatch 

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