Name of the Company: Vodafone Group
Business Sector: Telecom
Operating Geography: United Kingdom, Europe, Global
About the Company: Vodafone Group plc is a major British multinational telecom company which is headquartered in London, U.K. The profound idea of cellular boom began when Racal Electronics plc and Millicom Inc. partnered in 1984 to offer mobile telephone services, thus marking the start of the Vodafone brand. Vodafone Group plc was finally established as an independent company in 1991. It has a significant presence in the Asia Pacific, Africa, the Middle East and Europe. It has 75 million 4G customers and has more than 111,000 employees as of 2017.
Revenue: €47.6 billion (FY ending March 31st 2017) – (Indian revenues excluded due to proposed merger)
Competitive Analysis of vodafone group
|1. Extensive market coverage|
2. Innovative advertising strategies
3. Success of M-Pesa
4. Improved financials
|1. Declining subscriber base
2. Weak performance in European markets
|1. Proposed merger with Idea Cellular in Indian markets |
2. Rising investments to drive revenue growth
3. 5G to bring seamless connectivity and market growth
4. Huge potential in Africa
|1. Impact of Brexit and the subsequent devaluation of the British pound
2. Intense competition across markets
1. Extensive market coverage: Vodafone Group enjoys a significant customer base spread all across the globe. It operates in more than 30 different countries and has partner operations in many more additional places. Thus, it enjoys a significant share of the telecom market in most of the countries that it operates in. As of 2017, Vodafone Group occupies 50.9 %, 22.7 %, 22.6 %, 32.3 % and 33.9 % of the market share in South Africa, India, UK, Italy and Germany respectively. It was ranked the 6th most valuable global telecom brand in 2017.
2. Innovative advertising strategies: Innovation has always been a part of Vodafone Group’s advertising strategy. Vodafone was the first to partner with Yahoo in mobile advertising back in 2006. The company had roped in Ogilvy in 2017 to launch its “youth brand,” VOXI in United Kingdom which offers endless data on social apps. Further starting from the Hutch re-branding with Vodafone Group with a pug as their brand ambassador and punched with the famous tagline, “Wherever you go, our network follows” to the launching of Zoozoos using IPL 2 as a platform In Indian markets, which was an instant success with the masses and gave a huge boost to Vodafone Group’s brand. Vodafone Group has always managed to attract customers through its unique advertising strategies.
3. Success of M-Pesa: M-Pesa is the world’s most successful money transfer service. It enables millions of people who have access to a mobile phone, but do not have or have only limited access to a bank account, to top-up airtime, send and receive money, make bill payments and much more. Vodafone Group offers M-Pesa services in several counties in Africa and Asia and Eastern Europe. It was revealed that a record 614 million M-Pesa transactions were processed during December 2016. M-Pesa’s impact in Kenya put mobile money services on the global map.
4. Improved financials: The group total revenue stood at £47.6 billion, as per the 2017 annual report of the company. The organic adjusted EBITDA increased by 5.8 percent to £14.1 billion. The dividend also increased by 2 percent to 10.03c. Vodafone Group also delivered a free cash flow of £4.1 billion in 2017. The company has also improved its fixed assets efficiency.
1. Proposed merger with Idea Cellular in Indian markets: Vodafone Group India’s proposed $23 billion merger with Idea Cellular, once completed, will create India’s largest telecom firm and will be better placed to take on the threats posed by Reliance Jio. It will also focus on mobile data, in converse services, in Internet of Things (IoT), in cloud services, in machine to machine, as said by the Vodafone Group’s CEO Vittario Colao. Also, it will combine multiple technologies into a single machine network for digital connectivity and provide seamless high speed -called Unified Communication (Unified Communication is already a part of Vodafone Group’s offerings in many countries, excluding India).
2. Rising investments to drive revenue growth: Vodafone Group has disclosed its plans to invest USD 655 million to upgrade its technology centre. It also declared its plans to invest USD 1310 million to upgrade and expand Vodafone Group India network coverage. Plans to monetise in the future will bring in greater revenues. Vodafone Group has also recently bought You Broadband, a specialist Broadband-to-home company based in India, which already has 2 lakh customers and is present in 11 cities. In June, 2017, Vodafone Group partnered with LG Unplus in South Korea. This association will offer enterprise services and unified communications to MNCs with a presence in South Korea and internationally. Also, Vodafone Group has come up with a small cell, called “Crowdcell” to provide mobile network coverage into more localized areas such as cars, buildings, concerts, and even drones.
3. 5G to bring seamless connectivity and market growth: 5G technology is the future of telecom networks and has the potential to boost real global GDP growth by $3 trillion dollars cumulatively from 2020 to 2035 according to a Qualcomm report. Vodafone Group has partnered with Vodafone Group is partnering technology players like Huawei, Nokia, Ericsson, Intel and Qualcomm Technologies to work on 5G technologies. The company has also conducted its first field demonstration of Massive Multiple Input Multiple Output (MIMO) using a Frequency Division Duplex (FDD) band. The UK government is investing £1.7bn by end 2017 to support superfast broadband rollout in UK which will also boost 5G. Under a program called "5G Testbeds and Trials", £25m of matched funding is being made available to companies in the United Kingdom to develop 5G technology. The global rollout for 5G is expected to start by 2020. Further the Indian government has declared the formation of a high-level panel to develop a roadmap for bringing 5G telecom services into operation in India by 2020 which is a major market for Vodafone. This is a great opportunity for Vodafone Group, since it is one of the frontrunners in introducing 5G spectrum to India.
4. Huge potential in Africa: Africa’s telecom market has passed the tipping point from high potential to high growth. It has gone beyond the fixed-line phase of development to mass-market mobile networks and services. In addition, markets for mobile-enabled applications in areas like commerce, health, payments and education are vast, further providing huge opportunities for Vodafone Group to derive revenues from. The African mobile market is growing at an exponential rate. With an aim to make a social impact as well, Vodafone Group can replicate its M-Pesa success and cover the whole of Africa in order to generate massive revenues particularly from the mobile wallets segment.
The unpublished sections of the entire Vodafone SWOT analysis is available in the 'Complete Report' on purchase.
|1. Charges of cartelisation||1. High spectrum costs, amidst talks of 5G in India
2. Effect of Brexit
|1. Tech SME culture to promote local growth as well as improve digital economy||1. Effect of Brexit
2. Introduction of 5G
|1. Longer payment tenure and lower interest rates|
2. Talks with government to settle tax row
|1. Vision of zero environment harm safety culture|
1. Charges of cartelisation: Earlier in 2017, the Competition Commission of India (CCI) ordered an investigation against the telecom giants like Idea Cellular Ltd, Vodafone Group India Ltd and Bharti Airtel Ltd after Reliance Jio Infocomm Ltd complained about cartelisation and abuse of dominance. TRAI has stated that Airtel, Vodafone Group and Idea, jointly with the Cellular Operators Association of India (COAI), had denied points of interconnection to Reliance Jio. It also claimed that the three incumbent telephone operators have been trying to stifle the competition in the market. However, CCI has finally negated all such claims.
1. High spectrum costs, amidst talks of 5G in India: As the telecom giants prepare to align their businesses with the government vision of introducing 5G in the country by 2020, the high taxes and the spectrum costs faced by the industry continue to cause trouble for them. From the introduction and proliferation of bundled unlimited usage plans to lack of effective regulatory intervention, the industry is undergoing severe financial stress. Taxation is in the range of 29-32 percent.
2. Effect of Brexit: Mobile roaming charges are unlikely to go up, in the backdrop of Brexit. The EU had gradually forced mobile operators to cut lucrative roaming charges in recent years as it had sought to create a single market in the telecoms industry. The fees were due to be abolished entirely in June. Since Brexit, fears of increasing roaming charges have been doing the rounds. However, Vittorio Colao, the CEO of Vodafone Group, assurance comes as a great relief to the customers.
The unpublished sections of the entire PESTLE / PESTEL analysis is available in the 'Complete Report' on purchase.
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Etisalat SWOT and PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.