The Group’s strange relationship with Invitation Digital, the provider behind Vouchercloud, came to an end through a management buyout.

  • Vodafone avoids obligation to acquire Invitation Digital outright at a time its mature market m-commerce activity appears on the wane.

Vodafone sold its majority stake in odd-fitting and unwanted m-commerce specialist Invitation Digital (IDL) back to the provider’s leadership, after failing in a prolonged attempt to find a better deal with a third-party buyer.

The management buyout (MBO), whose value has not yet been disclosed, saw IDL sold to an entity called Cloud Savings Company Limited, placing the UK-based business back in the hands of its founders, Chief Executive Scott Davidson and Managing Director Greg Le Tocq.

Vodafone escapes from lock-in, but at what cost?

The deal is understood to have been part-triggered by a call/put option, which was due to become active during December 2017, and required Vodafone to buy the remaining 18.3% of IDL that it did not previously own. This option is understood to have originally been tabled for activation earlier in 2017, but put back to give more time for a deal to be firmed up.

To buy out that residual interest would have cost Vodafone around £7m (EUR7.9m), valuing IDL at around £38m – much more than the Group appears to have seen the business as worth. Between first investing in IDL, via Vodafone Ventures (VfV), during 2011, and early-2016, Vodafone appears to have shelled out around £20m building up its stake in IDL to 81.7%. It is not yet clear whether it has recouped this spend through the MBO.

Following an evident change of heart over the value of IDL ownership, around 2015-2016, Vodafone is understood to have held discussions with various potential buyers, with one particular deal progressing to due diligence in late-2016, but not being firmed up.

IDL escapes Group shackles

Neither IDL nor Vodafone responded to requests for additional detail on the MBO, or future plans for their relationship. Davidson’s ambiguously-worded quote in IDL’s statement on the MBO said it “represents a new era of independence for the business and unlimited opportunity for further growth”.

Founded in 2009, IDL powers m-couponing service Vouchercloud, an affiliate-based discount community application that was purportedly downloaded by more than nine million users during 2017, and is said to have relationships with more than 12, 000 retailers. The provider also operates a business-to-business adjunct called Giftcloud and white-label vouchering services for clients, including Vodafone.

IDL first came into the Group stable in May 2011, via a minority (20.25%) investment by VfV. In 2012, the stake was then sold internally, to Vodafone Sales & Services (VSS), the financial entity that oversees delivery of services, hosting, and support to the operator’s various in-country businesses, in a deal valuing IDL at around £26m. VSS acquired further shares through that buyout, to gain a majority stake (57%), and then steadily grew its position to the 81.7% interest held at sale.

IDL reported revenue of £15.3m, up 33%, for its last financial year, to 31 March 2017. Profit was £2.3m, up from £113, 000 in the previous twelve months.

For ‘IDL’, read ‘Zyb’ and ‘Wayfinder’

Vodafone has a pretty flaky record when it comes to buying in innovation through startup takeovers, and the relationship with IDL adds to its list of highly odd tie-ups. It conflicted with both the Group’s general reduced interest in its startup portfolio over recent years (Vodafonewatch, #160 and passim) and its strategy to wield ‘soft power‘ over partners, rather than be tied into handing out cash to increase exposure to them, as appeared to be the case for a long time, here.

It is also unclear what value the tie-up with IDL brought to Vodafone’s broader business, with muddiness surrounding general Group m-commerce strategy in mature markets, where over-the-top competitors dominate. The once-vaunted Vodafone Wallet platform – which is supported by Vouchercloud – was put under review as recently as 2015 (at around the same time Vodafone’s interest in IDL appears to have dipped). Vodafone Wallet has still not been rolled out as widely as originally intended and Vodafone remains noticeably quiet on uptake of the service, especially when compared with the noise it makes over the emerging markets-focused M-PESA offering’s success in Africa (Vodafonewatch, #136 and passim).

IDL’s reference to “unlimited” expansion hopes, following the MBO, does not suggest the relationship sat well with the startup’s ambitions either.

Image: Christine Roy / Unsplash.

Table of Contents

EXECUTIVE BRIEF

GROUP

Deals

CytaHellas to join Vodafone Greece’s quirky M&A family [p6]

  • Not a done deal yet
  • Distressed asset
  • Change of plan
  • Rival deal making ripples the pond in Europe

Vodafone strikes late-hour deal to sell Invitation Digital [p9]

  • Vodafone escapes from lock-in, but at what cost?
  • IDL escapes Group shackles
  • For ‘IDL’, read ‘Zyb’ and ‘Wayfinder’

Table 1: People movement highlights

Table 2: Partner/supplier people movement highlights

Group Technology

Vodafone goes with industry flow on 5G NR [p14]

  • What about standalone 5G NR?
  • A halfway house

Vodafone extends trials of MEC [p16]

  • Other recent MEC activity around the Group

EUROPE

Albania

VfA picks up spectrum from defunct rival Plus [p18]

Germany

Germany (at last) joins Group push on NB-IoT [p19]

  • Rival Telekom ahead on Things
  • Table 3: Vodafone on the NB-IoT trail: Group highlights, January 2018

Hungary

Vodafone Hungary eager to enact wireline plans [p22]

  • Figure 1: Hungary broadband market share comparison, 30 September 2017
  • Local-regional complications
  • Vodafone’s convergence jigsaw is far from complete
  • Table 4: Vodafone Europe Region OpCo mobile-wireline broadband user base weighting, at 30 September 2017 (‘000)

Ireland

SIRO deepens Huawei ties with XGS-PON trial [p25]

  • SIRO snapshot
  • Table 5: CityFibre’s “Gigabit Cities” footprint

UK

CityFibre and VfUK pick Milton Keynes for debut [p26]

  • Avoiding stepping on Virgin’s toes
  • Main duo still playing hard-to-get, despite VfUK’s Cityfibre flirtation

VfUK sees tide turn on 2.3GHz/3.4GHz auction [p28]

  • Yet another UK spectrum snafu
  • Table 6: Spectrum holdings of UK mobile network operators (MHz)
  • What happens now?
  • 5G ‘standalone’ first, using 3.5GHz

AFRICA, MIDDLE EAST, AND ASIA-PACIFIC REGION

Australia — Vodafone Hutchison Australia

VHA misses another chance to play spectrum catch-up [p32]

  • Table 7: Battle of the bands: VHA plays second fiddle to Telstra in multiband auction
  • Are you serious, VHA?
  • VHA joins 5G working group

Vodacom Group

Joosub to put beady AI on rivals [p35]

  • C-suite buy-in
  • Table 8: Digital Vodafone initiative, key tenets
  • Digital dreams

FURTHER READING

INDEX

Index

Symbols

3rd Generation Partnership Project (3GPP) 14, 15, 21, 30

A

Aditya Birla Group 6
Idea Cellular 6
Africa 10, 11, 12, 14, 16, 21, 31, 35
Egypt 11, 12, 33
– Kenya 36
– South Africa 16, 21, 35
Department of Communications (DOC) 34
Sub-Sahara 11
– Tanzania 11
Afrimax Group 9
Agile Software Inc. 36
Albtelecom 18
Alcatel-Lucent 8, 14
Altice Group
Cabovisao SA 12
Amazon.com Inc. 28
Americas
Argentina 21
– Canada 12
– USA 8, 14
Apax Partners 12
Apple 11
Asia-Pacific 9, 11, 31
Australia 11, 21, 32, 33, 34
Australian Communications & Media Authority (ACMA) 32, 33
– – National Broadband Network (NBN) 32
China 16
– Hong Kong 6
– India 6, 11, 19, 33
Licence Circles
Delhi 33
– – – Gujarat 33
– – – Karnataka 33
– – – Kolkata 33
– – – Mumbai 33
New Zealand 21
Axiata Group Bhd (TM International)
India (Idea Cellular, see also Aditya Birla) 6

B

Bharti Group 33
Airtel 33
Bité Group 9
British Airways 12
British Broadcasting Corp. (BBC) 28
BT Group 27
Openreach 27

C

CeBIT 20
CGI Group Inc. 11
Cisco Systems 14
CityFibre 26, 27
Conexus Mobile Alliance 9
C.P.A. Czech s.r.o. 36
Cyprus Telecommunications Authority 6, 7, 23
CytaHellas 6, 7

D

Dell 12, 14
Deutsche Bahn 19, 20
Deutsche Telekom 8, 11, 15, 19
Europe
Austria 8
– – Greece (see OTE) 7
– – Hungary (see Magyar Telekom) 22
– – UK (EE) 28, 29
Germany 19
– Systems Solutions
T-Systems 11
USA 12
DHL Worldwide Express 19, 20
DIEHL Metering 19, 20

E

EE (see DT, FT) 28, 29
Electricity Supply Board (Ireland) 25
Emblaze Group
European Telecom 16
EMC 14
Ericsson 15, 19, 20, 21, 28, 30, 34
Europe 8, 11, 12, 14, 17, 18, 19, 20, 22, 23
Albania 18, 22, 23
Electronic & Postal Communications Authority (AKEP) 18
Austria 8, 19
– Cyprus 6
– Czech Republic 11, 20, 23, 33
– France 8, 12
– Germany 11, 19, 20, 21, 23, 33, 36
Länder
Berlin 19
– – – North Rhine-Westphalia (Düsseldorf) 19, 20, 21
Greece 6, 7, 8, 20, 23
Government 7
Hungary 11, 12, 18, 22, 23
Gazdasagi Versenyhivatal (Competition Authority/GVH) 18
Ireland 8, 14, 20, 23, 25, 33
– Italy 8, 12, 20, 21, 22, 23, 33, 35
– Latvia 9
– Lithuania 9
– Malta 11, 18, 22, 23
– Netherlands 8, 12, 16, 19, 20, 23, 27, 33
– Poland 19
– Portugal 12, 23, 33
– Romania 12, 20, 23
– Spain 12, 16, 20, 23, 27
– Turkey 33
– United Kingdom (UK) 8, 9, 12, 14, 15, 23, 26, 28, 29, 30, 33, 35, 36
Office of Communications (Ofcom) 28, 29, 30
European Telecommunications Standards Institute 16
European Union 7, 15, 25, 30
European Commission 15

F

FireEye 12
Football Association
Premier League 27
Formula One 27
Forthnet 6, 7
Fortino Capital 12

G

Gemalto NV 21
Google 11
GSM Association (GSMA)
Mobile World Congress 14, 15

H

Huawei Technologies 16, 19, 20, 21, 25, 34
Hutchison Whampoa 11, 21, 32, 34
Hutchison 3G Australia Pty Ltd 34
– Hutchison Telecommunications Hong Kong Ltd (Hutchinson Telecom/HTHKH/3 Hong Kong) 34
– Vodafone Hutchison Australia Pty Ltd (VHA, (see Vodafone) 11, 21, 32, 33, 34

I

IBM 11, 14
Iliad 8
Intel 21
International Telecommunications Union 25
Invitation Digital 9

K

KPN 8

L

Largo Ltd
WIND Hellas 6
Liberty Global 8, 23, 26
Virgin Media 26, 27, 28
– Ziggo 8, 27

M

Magyar Telekom (see DT) 22
Market segments
Mobile data 35
– Network-sharing 7
– Over-the-top (OTT) 10
– Voice 7, 33, 35, 36
McKinsey & Co 12
MediaTek Inc. 21
mFormation Technologies 14
Micromuse 14
Microsoft 12, 21
Middle East 9, 11, 12, 14, 31
Egypt 11, 12, 33

N

Netflix Inc. 28
Neul 21
Nokia 15, 16, 19, 20, 21, 34

O

OMV Aktiengesellschaft 20
Oracle 14
Orange
Orange 15
– UK (see EE) 28, 29
OTE (Hellenic Telecom. Org. SA, see DT)
Cosmote 7
Greece 7

P

Panasonic 19, 20
PCCW 6
Petrom, Romania 20
PwC 6

Q

Qualcomm 15, 21, 29

R

RCS & RDS SA 23
Rogers Communications 12
RWE AG 20

S

Safaricom 11, 36
M-PESA 10, 12, 35, 36
Samsung 21, 34
Sequans Communications 21
Singapore Telecom
Optus (Australia) 32, 34
Sonaecom
Oni 12
SpiderCloud Wireless 16
Spreadtrum Communications Inc. 21
Sprint Nextel 11, 12

T

Techem 19, 20
Technology
2.5G 34
– 2G 34
– 3G 15, 28, 30
Evolved HSPA (HSPA+/I-HSPA)
MIMO 15
4G 16, 20, 30, 33, 34
Long Term Evolution (LTE) 15, 33
– – VoLTE (Voice-over-LTE) 33
5G 14, 15, 16, 28, 30, 32, 34
– Cloud computing 9, 12, 14, 21, 36
– Fibre 6, 7, 25, 26, 27
FTTP 26, 27
M2M 20
– Narrow Band Internet of Things (NB-IoT) 19, 20, 21
– OTA 15
– R&D 14, 16
– SIM 21
– Smartphone 16
– SMS 22, 30
– Spectrum 8, 15, 18, 19, 28, 29, 30, 32, 33, 34
700 MHz 34
– – 800 MHz 18, 19, 20, 29
– – 850 MHz 34
– – 900 MHz 18, 21, 29, 34
– – 1000 MHz 18, 34
– – 1800 MHz 18, 29, 32, 33, 34
– – 2100 MHz 18, 29, 32, 34
– – 2500 MHz 34
– – 2600 MHz 18, 29
– – 3500 MHz 15, 28, 30
– – Digital dividend 18
Tablet 16
– VDSL 7
– W-LAN 16, 33
Tele2 8
Netherlands 8
Telecom Egypt 12
Telecom Italia 22
Telefónica Group 12, 15, 27, 28
Europe 28, 29
España 27
– – UK 28
Movistar 27
Telekom Austria Group 8
Austria
A1 8
Telit 21
Telstra 32, 34
Texas Pacific Group (TPG) 32
T-Systems 11

U

u-blox 21
UEFA 27
Champions League 27
UEFA European Super Cup 27
Unilever 11
Unitel 12
UPC 8, 22, 23

V

Verizon Communications 25
Vodacom Group 11, 16, 21, 35, 36
Group 11, 35, 36
– South Africa 16, 21, 35
– Tanzania 11
Vodafone
Africa, Middle East, and Asia Pacific Region (AMAP) 31
Africa 10, 11, 12, 14, 16, 21, 31, 35
– – Asia 9, 11, 31
– – Australia 11, 21, 32, 33, 34
VHA Pty. Ltd (see Hutchison Whampoa) 11, 32, 33, 34
Egypt 11, 12, 33
– – India 6, 11, 19, 33, 34
– – Kenya (see Safaricom) 11, 36
– – Middle East 9, 11, 12, 14, 31
– – New Zealand 21
– – Pacific 9, 11, 31
– – South Africa (see Vodacom) 11, 16, 21, 35, 36
– – Turkey 33
Europe Region 12, 18, 22, 23
Albania 18, 22, 23
– – Cable & Wireless Worldwide 8
– – Czech Republic 11, 20, 23, 33
– – Germany 11, 19, 20, 21, 23, 33, 36
KDG Holding GmbH (Kabel Deutschland) 11
Greece 6, 7, 8, 20, 23
Hellas On Line (HOL) 7
– – – Victus Networks 7
– – – Zelitron 20
Hungary 11, 12, 18, 22, 23
– – Ireland 8, 14, 20, 23, 25, 33
SIRO 25
Italy 8, 12, 20, 21, 22, 23, 33, 35
– – Malta 11, 18, 22, 23
– – Netherlands 8, 12, 16, 19, 20, 23, 27, 33
VodafoneZiggo 8, 23, 27
Portugal 12, 23, 33
– – Romania 12, 20, 23
– – Spain 12, 16, 20, 23, 27
– – UK 8, 9, 12, 14, 15, 23, 26, 27, 28, 29, 30, 33, 35, 36
Executives
Atkinson, Sean 25
– – Bateson, Emma 11
– – Bordeianu, Ana 11
– – Carioca, Paula 12
– – Carra, Anita 11
– – Colao, Vittorio 35
– – Dawar, Manish 11
– – Dhillon, Arjun 11
– – Dvorak, Petr 11
– – El Beltagy, Mostafa 12
– – Gastaut, Stefano 11
– – Gupta, Saurabh 11
– – Hellemink, Frank 11
– – Ibbetson, Luke 14
– – Jeffery, Nick 27, 28
– – Joosub, Shameel 35
– – Kong, Eric 11
– – Kraus, Andrea 11
– – Mahmoud, Hany 33
– – Maseko, Raphael 11
– – Neal, Adrian 16
– – Nelson, Amanda 22
– – Reif, Nils 11
– – Reisten, Thomas 11
– – Rossini, Andrea 12
– – Stanica, Gabriela 12
– – van Graan, Errol 11
Ex-executives
Combes, Michel 12
– – Geldmacher, Jan 12
– – Laurence, Guy 12
– – Rook, Ivo 11, 12
– – Showell, Steve 12
– – Tennyson, Richard 12
Group 11, 12, 14
Americas (see Verizon Wireless) 12
– – Headquarters 19
– – Marketing
ZYB (Imity) 10
Partner Markets 6, 9, 11, 14
Africa (Afrimax) 9
– – – Austria (A1/Telekom Austria) 8
– – – Hong Kong (Hutchison Telecom) 34
– – – Kenya (Safaricom) 11, 36
– – – Latvia and Lithuania (Bité) 9
R&D 14, 16
– – Vodafone Carrier Services 8
– – Vodafone Global Enterprise (VGE) 11, 12, 14
– – Vodafone Ventures 9
SpiderCloud Wireless (see separate) 16
Wayfinder Systems 10
Products
Europe 18, 23
– – Liberty (Malta) 8, 23, 26
– – Terminals
236 23
V by Vodafone 19
– – Vodafone TV 7, 27
– – ZYB 10

W

Walt Disney Company, The 27

Z

Zain (MTC) 9

About

About Vodafonewatch

Report: #161
Published: January 2018
Next report: February 2018
For more information visit: Vodafonewatch