Vodafone. The following report consists of The goods and services provided by Vodafone, The dynamics of Vodafones business with the help of Porters Five Forces, The current position and potential of Vodafone by SWOT
EXECUTIVE SUMMARY
Vodafone Group Plc is the world's leading mobile telecommunications company, with a significant presence in Europe, the Middle East, Africa, Asia Pacific and the United States through the Company's subsidiary undertakings, joint ventures, associated undertakings and investments.
The Group's mobile subsidiaries operate under the brand name 'Vodafone'. In the United States the Group's associated undertaking operates as Verizon Wireless. During the last two financial years, the Group has also entered into arrangements with network operators in countries where the Group does not hold an equity stake. Under the terms of these Partner Network Agreements, the Group and its partner networks co-operate in the development and marketing of global services under dual brand logos.
At 30 June 2007, based on the registered customers of mobile telecommunications ventures in which it had ownership interests at that date, the Group had 232 million customers, excluding paging customers, calculated on a proportionate basis in accordance with the Company's percentage interest in these ventures.
The Company's ordinary shares are listed on the London Stock Exchange and the Company's American Depositary Shares ('ADSs') are listed on the New York Stock Exchange. The Company had a total market capitalization of approximately £88 billion at 3 July 2007.
Vodafone Group Plc is a public limited company incorporated in England under registered number 1833679. Its registered office is Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, England.
(www.vodafone.com)
The following report consists of
* The goods and services provided by Vodafone,
* The dynamics of Vodafone's business with the help of Porter's Five Forces,
* The current position and potential of Vodafone by SWOT analysis,
* The Supply chain of Vodafone,
* The security and legal issues of Vodafone,
* The research and development carried out by Vodafone,
* The information technology used by Vodafone.
BUSINESS BACKGROUND
GOODS AND SERVICES OF VODAFONE
Voice Services
Revenue from voice services makes up the largest portion of the Group's turnover and the Group is undertaking a wide range of activities to encourage growth in the usage of these services. In increasingly competitive local markets where value for money is an important consideration, improving use of existing products and developing a range of new offerings for customers has helped the Group to continue to grow its total voice revenue. Pricing is an important factor for customers choosing a mobile phone network and is also important in encouraging usage of services whilst maximising revenue and margins. Two main pricing models exist in the mobile market - contract and prepaid. Contract customers are usually governed by a written contract and credit facilities are granted to them to enable access to mobile network services. In most cases contracts have a term of 12 to 24 months with monthly payments for services and, in many of the Group's mobile operating subsidiaries, the option of purchasing a subsidized handset. A prepaid customer pays in advance in order to gain access to voice and other services. The take-up of these models in the markets in which the Group operates varies significantly, from Japan and the US, where the vast majority of customers are on contract plans, to Italy, where the market is predominantly prepaid. (Vodafone Annual Report 2005)
Social Products
In 2005 work continued on making mobile services more accessible to people with special communication needs. This includes a product that converts text to speech, known in English speaking markets as Vodafone Speaking Phone, which is now available in six markets. This gives users who are blind or visually impaired access to all handset features, including text messaging. (Vodafone Annual Report 2007)
Non-voice Services
Messaging Services
All of the Group's mobile operating subsidiaries offer a short message service, which allows customers to send and receive text messages using mobile handsets and various other devices. The multimedia messaging services ("MMS"), which offer customers the ability to send and receive multiple media, such as pictures, music, sound, video and text, to other compatible phones, are also available in all Group mobile operating subsidiaries, with the exception of Albania. (Vodafone Annual Report 2005)
Vodafone Mobile Connect data cards
The Vodafone Mobile Connect data card provides working mobility to customers accessing email and company applications with access speeds up to 384 kilobits per second when connected to a 3G network. The Vodafone Mobile Connect 3G/GPRS data card has now been rolled out across 17 markets, including the Group's associated undertakings in France, Belgium and South Africa and the Group's Partner Network operators in Austria, Bahrain and Finland. The product portfolio was enhanced in the financial year with the launch of a quad-band data card allowing customers to connect whilst travelling in the US and a data card supporting both GPRS and EDGE technology which provides high speed connectivity in a number of the Group's Partner Networks. Vodafone Mobile Connect data cards are available in an increasing number of distribution channels and with a growing range of service and price bundles. (Vodafone Annual Report 2007)
PORTER'S FIVE FORCES
. Barriers to Entry
(a) Economies of Scale - Moderate
The mobile phone companies were expanding internationally at a fast pace, but the potential benefits of economies of scale in R&D and network exploitation remained unclear. Mobile phone manufacturers did enjoy great economies of scale in production, marketing and R&D, which allowed the three major producers to dominate the industry and sustain a competitive advantage. Strategic alliances with these producers would allow the major mobile phone operators to share in these economies, to lower costs for both companies and to minimize the threat of new entrants.
(b) Product Differentiation - Low
There was no evidence that mobile phone operators achieved product differentiation. In fact, mobile phone manufacturing brands were more important to consumers than those of the mobile phone operators. As a result, mobile phone operator product differentiation could only be successful if in conjunction with the major phone manufacturer brands. The multimedia content of mobile phone operators could prove to be a successful strategy for product differentiation in the future.
(c) Capital Requirements - High
Compared to capital requirements of the telecommunications industry as a whole, the mobile phone industry capital requirements were low. However, within the mobile phone industry, capital requirements present a significant barrier to entry. Because spectrum licenses went up for auction, only the most financially fit and liquid mobile phone operators could acquire these essential components of their business strategy. One method of negating these stiff capital requirements within the mobile phone industry was to acquire or form alliances with existing operators in other countries. These arrangements took shape through the use of roaming agreements, allowing one operator's customers to use their allies' network when their own was unavailable.
(d) Switching Costs - Low
Because product differentiation is low between the mobile phone operators, switching costs are bound to be low. If multimedia content becomes a major opportunity for product differentiation as is expected, this could raise the switching costs for customers.
Switching costs could also be higher if mobile phone operators and manufacturers decided to create and operate equipment that was not compatible across mobile phone operators. This seems unlikely, as it would also reduce the ability of mobile phone operators to put in place roaming agreements with their allies.
(e) Access to Distribution Channels - Low
European regulations governed distribution channels through the use of spectrum licenses. This policy of auctioning licenses to mobile phone operators should be considered a strong barrier to new entrants.
(f) Government Policy - Low
Government controls the entry into the mobile phone industry through their spectrum licenses. Deregulation would pose a significant threat to existing mobile phone operators, but does not seem to have been on the horizon. (www.cybozone.com)
2. Bargaining Power of Suppliers
Mobile phone manufacturers are the primary supplier to the mobile phone operator market. These manufacturers were dominated by Ericsson, Nokia, and Motorola with 61 percent of the market. Because the mobile phone manufacturing brands were more important to consumers than the mobile phone operators themselves, bargaining power of suppliers was high. Industry firms are not a significant customer for the supplier group because the suppliers operate in far more international locations and markets than the mobile phone operators. Suppliers' goods are critical to buyers' marketplace success. Mobile phone manufacturers could integrate forward into the industry. These suppliers were credible, having substantial resource and provide a highly differentiated product. (www.cybozone.com)
3. Bargaining Power of Buyers
There was very little differentiation among mobile phone operators, and the switching costs are low. Accordingly, the industry firms battle for higher quality, greater levels of service, and lower prices than their competitors, and the consumers benefit. Mobile phone customers purchase the entire portion of the mobile phone operator's industry output. The sales of the mobile phone service account for the entire amount of the seller's annual revenues. The mobile phone customers could switch to another mobile phone operator at little, if any, cost. The mobile phone industry's products are undifferentiated and standardized. The buyers do not pose a credible threat of backward integration because of the high capital requirements. (www.cybozone.com)
4. Threat of Substitutes
Substitute products for the mobile phone industry could be considered fixed-line phone products if convergence is not considered to exist. This substitute product's price is not lower, and its quality and performance capabilities are negligible compared to mobile phone products. Switching costs are low but the advantage goes to the mobile phone industry because there is a greater chance of switching to mobile phones from fixed-line phones than the other way around. (www.cybozone.com)
5. Degree of Rivalry
(a) Numerous or Equally Balanced Competitors - High
There are many equally balanced ...
This is a preview of the whole essay
4. Threat of Substitutes
Substitute products for the mobile phone industry could be considered fixed-line phone products if convergence is not considered to exist. This substitute product's price is not lower, and its quality and performance capabilities are negligible compared to mobile phone products. Switching costs are low but the advantage goes to the mobile phone industry because there is a greater chance of switching to mobile phones from fixed-line phones than the other way around. (www.cybozone.com)
5. Degree of Rivalry
(a) Numerous or Equally Balanced Competitors - High
There are many equally balanced competitors in the mobile phone industry, and industries with these characteristics tend to have strong rivalries.
(b) Slow Industry Growth - Low
Because the mobile phone market is undoubtedly growing, there is little pressure to take customers from competitors.
(c) Lack of Differentiation or Low Switching Costs - High
Because buyers in the mobile phone industry believe mobile phone service is a commodity, rivalry within the mobile phone industry is high. Switching costs for mobile phone consumers are also low, so competitors can easily attract buyers through pricing and service offerings.
(d) High Strategic Stakes - High
Nearly all operators in the mobile phone industry considered it their primary market, so competitive rivalry is intense. Europe is a dense market; high strategic stakes also exist because of this geographic location. These competitors want as much of the markets as then can get. (www.cybozone.com)
SWOT ANALYSIS
. Strengths
• Experience and knowledge in the mobile phone business.
• Multi-market and multi-structure outlook on the mobile consumers and the many markets in which they are present.
• Strong ability to manage change and acquisition.
• Research and development.
• Immense market power, twice as big as nearest competitor.
(www.cybozone.com)
2. Weaknesses
• Managerial resources thin due to rapid growth and numerous acquisitions.
• Low market power in Europe.
(www.cybozone.com)
3. Opportunities
• Restructuring and smaller acquisitions.
• Acquisition to dominate many markets with economies of scale.
(www.cybozone.com)
4. Threats
• World-wide competitors.
• Management can be overly focused on acquisitions.
• Low differentiation.
(www.cybozone.com)
SUPPLY CHAIN
The Group continues to implement Vodafone's Code of Ethical Purchasing, which sets out environmental and labour standards for suppliers.
* A total of 290 suppliers, including approximately 45 strategic global suppliers, have been assessed using the Group's supplier evaluation scorecard, in which CR accounts for 10% of the total. The scorecard evaluates the supplier's CR management systems, public reporting and approach to managing their suppliers. 17 site evaluations of high risk suppliers have been completed.
* A supplier qualification process, incorporating CR, has been implemented in all mobile operating companies.
* A "Speak Up" programme to provide suppliers with a means to report any ethical concerns has been introduced in all mobile operating companies. Less than ten incidents have been reported to date; all have been investigated and resolved satisfactorily. (Vodafone Annual Report 2005)
SECURITY AND LEGAL ISSUES OF VODAFONE
RISK FACTORS
Regulatory decisions and changes in the regulatory environment could adversely affect the Group's business.
Because the Group has ventures in a large number of geographic areas, it must comply with an extensive range of requirements that regulate and supervise the licensing, construction and operation of its telecommunications networks and services. In particular, there are agencies which regulate and supervise the allocation of frequency spectrum and which monitor and enforce regulation and competition laws which apply to the mobile telecommunications industry. Decisions by regulators regarding the granting, amendment or renewal of licences, to the Group or to third parties, could adversely affect the Group's future operations in these geographic areas. The Group cannot provide any assurances that governments in the countries in which it operates will not issue telecommunications licences to new operators whose services will compete with it. In addition, other changes in the regulatory environment concerning the use of mobile phones may lead to a reduction in the usage of mobile phones or otherwise adversely affect the Group. Additionally, decisions by regulators and new legislation, such as those relating to international roaming charges and call termination rates, could affect the pricing for, or adversely affect the revenue from, the services the Group offers. (Vodafone Annual Report 2007)
Increased competition may reduce market share or revenue.
The Group faces intensifying competition. Competition could lead to a reduction in the rate at which the Group adds new customers and to a decrease in the size of the Group's market share as customers choose to receive telecommunications services, or other competing services, from other providers. Examples include, but are not limited to, competition from internet-based services and MVNOs.
The focus of competition in many of the Group's markets continues to shift from customer acquisition to customer retention as the market for mobile telecommunications has become increasingly penetrated. Customer deactivations are measured by the Group's churn rate. There can be no assurance that the Group will not experience increases in churn rates, particularly as competition intensifies. An increase in churn rates could adversely affect profitability because the Group would experience lower revenue and additional selling costs to replace customers.
Increased competition has also led to declines in the prices the Group charges for its mobile services and is expected to lead to further price declines in the future. Competition could also lead to an increase in the level at which the Group must provide subsidies for handsets. Additionally, the Group could face increased competition should there be an award of additional licences in jurisdictions in which a member of the Group already has a licence. (Vodafone Annual Report 2007)
Delays in the development of handsets and network compatibility and components may hinder the deployment of new technologies.
The Group's operations depend in part upon the successful deployment of continuously evolving mobile telecommunications technologies. The Group uses technologies from a number of vendors and makes significant capital expenditures in connection with the deployment of such technologies. There can be no assurance that common standards and specifications will be achieved, that there will be inter-operability across Group and other networks, that technologies will be developed according to anticipated schedules, that they will perform according to expectations or that they will achieve commercial acceptance. Commercially viable 3G handsets may not be available in the timeframe required or in the amounts needed, which may reduce the potential revenue benefits from 3G services. The introduction of software and other network components may also be delayed. The failure of vendor performance or technology performance to meet the Group's expectations or the failure of a technology to achieve commercial acceptance could result in additional capital expenditures by the Group or a reduction in profitability. (Vodafone Annual Report 2007)
Expected benefits from cost reduction initiatives may not be realised.
The Group has entered into several cost reduction initiatives principally relating to the outsourcing of IT application development and maintenance, data centre consolidation, supply chain management and a business transformation programme to implement a single, integrated operating model using one ERP system. However, there is no assurance that the full extent of the anticipated benefits will be realised. (Vodafone Annual Report 2007)
Changes in assumptions underlying the carrying value of certain Group assets could result in impairment.
Vodafone completes a review of the carrying value of its assets annually, or more frequently where the circumstances require, assessing whether those carrying values can be supported by the net present value of future cash flows derived from such assets. This review examines the continued appropriateness of the assumptions in respect of highly uncertain matters upon which the carrying values of certain of the Group's assets are based. This includes an assessment of discount rates and long term growth rates, future technological developments and timing and quantum of future capital expenditure, as well as several factors which may affect revenues and profitability identified within other Risk Factors in this section such as intensifying competition, pricing pressures, regulatory changes and the timing for introducing new products or services. Due to the Group's substantial carrying value of goodwill under IFRS and licences under US GAAP, the revision of any of these assumptions to reflect current or anticipated changes in operations or the financial condition of the Group could lead to impairment in the carrying value of certain assets in the Group. Whilst impairment does not impact reported cash flows, it does result in a non-cash charge on the income statement, and thus no assurance can be given that any future impairments would not affect the Company's reported distributable reserves and therefore its ability to make distributions to its shareholders or repurchase its shares. (Vodafone Annual Report 2007)
The Group's geographic expansion may increase exposure to unpredictable economic, political and legal risks.
Political, economic and legal systems in emerging markets historically are less predictable than in countries with more developed institutional structures. As the Group increasingly enters into emerging markets, the value of the Group's investments may be adversely affected by political, economic and legal developments which are beyond the Group's control. (Vodafone Annual Report 2007)
Expected benefits from acquisitions may not be realised.
The Group has made significant acquisitions which are expected to deliver benefits resulting from the anticipated growth potential of the relevant markets. However, there is no assurance as to the successful integration of companies acquired by the Group or the extent to which the anticipated benefits resulting from the acquisitions will be achieved. (Vodafone Annual Report 2007)
The Company's strategic objectives may be impeded by the fact that it does not have a controlling interest in some of its ventures.
Some of the Group's interests in mobile licences are held through entities in which it is a significant but not controlling owner. Under the governing documents for some of these partnerships and corporations, certain key matters such as the approval of business plans and decisions as to the timing and amount of cash distributions require the consent of the partners. In others, these matters may be approved without the Company's consent. The Company may enter into similar arrangements as it participates in ventures formed to pursue additional opportunities. Although the Group has not been materially constrained by the nature of its mobile ownership interests, no assurance can be given that its partners will not exercise their power of veto or their controlling influence in any of the Group's ventures in a way that will hinder the Group's corporate objectives and reduce any anticipated cost savings or revenue enhancement resulting from these ventures. (Vodafone Annual Report 2007)
Expected benefits from investment in networks, licences and new technology may not be realised.
The Group has made substantial investments in the acquisition of licences and in its mobile networks, including the roll out of 3G networks. The Group expects to continue to make significant investments in its mobile networks due to increased usage and the need to offer new services and greater functionality afforded by new or evolving telecommunications technologies. Accordingly, the rate of the Group's capital expenditures in future years could remain high or exceed that which it has experienced to date. There can be no assurance that the introduction of new services will proceed according to anticipated schedules or that the level of demand for new services will justify the cost of setting up and providing new services. Failure or a delay in the completion of networks and the launch of new services, or increases in the associated costs, could have a material adverse effect on the Group's operations. (Vodafone Annual Report 2007)
LEGAL PROCEEDINGS
The Company and its subsidiaries are currently, and may be from time to time, involved in a number of legal proceedings, including inquiries from or discussions with governmental authorities, that are incidental to their operations. However, save as disclosed below, the Company and its subsidiaries are not involved currently in any legal or arbitration proceedings (including any governmental proceedings which are pending or known to be contemplated) which are expected to have, or have had in the twelve months preceding the date of this report, a significant effect on the financial position or profitability of the Company and its subsidiaries.
The Company is a defendant in four actions in the United States alleging personal injury, including brain cancer, from mobile phone use. In each case, various other carriers and mobile phone manufacturers are also named as defendants. These actions are at an early stage and no accurate quantification on any losses which may arise out of the claims can therefore be made as at the date of this report. The Company is not aware that the health risks alleged in such personal injury claims have been substantiated and will be vigorously defending such claims.
Between 18 September and 29 November 2002, nine complaints were filed in the United States District Court for the Southern District of New York against the Company and Lord MacLaurin, the Chairman of the Company, and Sir Christopher Gent, Sir Julian Horn-Smith and Mr. Kenneth Hydon, executive officers of the Company. The actions were brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated there under by the Securities and Exchange Commission. The complaints, which purport to be brought on behalf of all purchasers of ADSs of Vodafone between 7 March 2001 and 28 May 2002, alleged that Vodafone's financial statements and certain Vodafone financial disclosures were materially false and misleading. More specifically, the complaints alleged that, between 7 March 2001 and 28 May 2002, defendants made various material misrepresentations relating to Vodafone's investments in fixed-wire operations, goodwill, and prior acquisitions in an effort to inflate artificially the price of Vodafone securities. The complaints sought compensatory damages in an unspecified amount, interest, reasonable costs including attorneys' fees and experts' fees, and equitable and/or injunctive relief as permitted by law. (Vodafone Annual Report 2007)
RESEARCH AND DEVELOPMENT (R&D) OF VODAFONE
The Group R&D function comprises an international and multicultural team for applied research in mobile and internet communications and their applications. The majority of the work of the Group's R&D function is undertaken through the Group's research centres, located in Newbury, Maastricht, Munich, California and Madrid, and in an associate centre in Paris belonging to Vodafone's associated undertaking in France, SFR. In the 2007 financial year, the R&D centre in Milan was re-absorbed into the Italian operation and ceased to engage in research and development for the Group. Governance is provided by the Group R&D Board, which is chaired by the Group R&D Director and consists of the chief technology officers from six of the operating subsidiaries in Europe, the heads of Business Strategy and Global Terminals and a representative from EMAPA.
Business
Group R&D works beyond the traditional established markets of Vodafone in search of technology based business opportunities. It delivers a systematic programmed of demand inspired research and development in wireless and internet communications that is positioned between basic research and commercial product development. It directs Vodafone's work with technical standards bodies and its intellectual property activities. Typically, Group R&D works on developments that are expected to be introduced into the business in three to five years' time. This horizon covers some significant business developments that can already be anticipated -for example, the transition of traditional telecommunications protocols to the internet protocol, the emergence of the internet as a personal communications platform and the introduction of wireless technology beyond our current generation - including disruptive radio technologies for mobilizing the internet. The emphasis of the Group R&D work programme is on providing technology analysis and a vision that can contribute directly to business decisions, enabling new applications of mobile communications, using new technology for new services and research for improving operational efficiency and quality of the Group's networks. This is done by pioneering the adoption of new technologies, business opportunities and innovations through technology analysis, trials, invention and prototypes; by making Vodafone aware of market opportunities or threats posed by new technologies and business models, and helping the Company to exploit or resist them; by providing technology leadership by working with the industry to define and standardize the technology Vodafone uses; and by securing intellectual property and greater technology ownership for the Company. (Vodafone Annual Report 2007)
The work of Group R&D is delivered through a portfolio of programmes and cross industry activities with a substantial number of trials, demonstrations and prototypes. All work is set in a business and social context. There is growing emphasis on work that secures intellectual property rights or can otherwise lead to Vodafone having stronger influence on the technology it will deploy in the future. In addition, Group R&D provides leadership for funding research into health and safety aspects of mobile communications and technical leadership for the Group's spectrum strategy. The main themes currently being researched are mobile technologies beyond the current generation, the internet as a communications platform, mobile TV and media and service enabler technology like near field communications. A number of significant wireless technology trials are underway and several internet based services have been prototyped and demonstrated within the Vodafone community. Application of mobile communications to intelligent transport systems and the digital home are also being researched. Much of the work of Group R&D is done in collaboration with others, both within the Group and externally. The Group has established R&D collaboration with all of its traditional suppliers and is now extending this to other companies in the communications, media and internet industries. There is a programme of work with academic institutions, which includes student placements in Vodafone laboratories during summer vacations, and the Group is developing new ways in which to use the internet as a platform for research and innovation - at the forefront of this is Vodafone ßetavine, a research space on the internet. There is also a programme to capture innovation from start-up companies, particularly those based in Silicon Valley, USA, and many of those companies were introduced to the Vodafone Executive Committee and operating company CEOs at a specially hosted event in September 2006. Group R&D also continues to develop relationships with a number of universities. These relationships include sponsoring research students, collaboration in European research activities, funding specialized research centres and working with Vodafone funded chairs and research publications. This year, Group R&D again hosted an academic conference where it brought together its academic partners to consolidate its academic research programme. The R&D programme provides the Group with long term technical policy, strategy and leadership, as well as providing technical underpinning for the Group's public policies and government relations, and is shared with all subsidiaries of the Company and Group functions. They are able to influence the programmed through working relationships that are designed to allow delivery of the results of the programmed directly into the business units where they are needed. (Vodafone Annual Report 2007)
Development of the company
The Company was incorporated under English law in 1984 and through a series of business transactions, including the merger with AirTouch Communications, Inc. in 1999 and the acquisition of Mannesmann AG in 2000, has become a world leader in providing voice and data communications for both consumer and enterprise customers.
The Group has continued to execute on its strategy of actively managing its portfolio to maximize returns, with recent acquisitions in the high growth markets of Romania, the Czech Republic, Turkey and India.
Vodafone began in July 1984 when it was incorporated as Racal Strategic Radio Limited (registered number 1833679). After various name changes, 20% of Racal Telecom Plc capital was offered to the public in October 1988.The Company 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.
Between 1991 and 2004 the Group entered into various transactions which consolidated the Group's position in the United Kingdom and enhanced its international presence. The most significant of these transactions were as follows:
• The merger with AirTouch Communications, Inc. ("AirTouch"), which completed on 30 June 1999. The Company changed its name to Vodafone AirTouch Plc in June 1999. The company reverted to its former name, Vodafone Group Plc, on 28 July 2000.
• The acquisition of Mannesmann AG ("Mannesmann"), which completed on 12 April 2000. Through this transaction the Group acquired subsidiaries in two of Europe's most important markets, Germany and Italy, and increased the Group's indirect holding in SFR, a French mobile telecommunications operator.
• Over a period from June 1999 to October 2001 the Group acquired an effective interest of 69.76% in J-Phone Co. Limited. During the 2004 financial year, after various name changes and business transactions, the Group held a 69.7% interest in Vodafone K.K. and a 66.7% interest in
Vodafone Holdings K.K. (Vodafone Annual Report 2007)
Summary of transactions since 31 March 2004
• 25 May 2004 - Japan: Increased effective stake in Vodafone K.K. to 98.2% and stake in Vodafone Holdings K.K. to 96.1% for £2.4 billion.
• 1 October 2004 - Japan: Merger of Vodafone K.K. and Vodafone Holdings K.K. completed. The Group's stake in the merged company was 97.7%.
• 12 January 2005 - Hungary: Vodafone Hungary became a wholly owned subsidiary of the Group following various transactions throughout the 2005 financial year.
• 26 January 2005 - Egypt: Disposed of 16.9% of Vodafone Egypt reducing the Group's effective interest to 50.1%.
• 11 May 2005 - France: The Group's effective shareholding in Neuf Cegetel became 12.4% after a transaction completed by the Group's associated undertaking SFR.
• 31 May 2005 - Czech Republic and Romania: 79.0% of the share capital of MobiFon S.A. ("MobiFon") in Romania, and 99.9% of the share capital of Oskar Mobil a.s. ("Oskar") in the Czech Republic were acquired for $3.5 billion (£1.9 billion). In addition, the Group assumed approximately $1.0 billion (£0.6 billion) of net debt.
• 18 November 2005 - India: Acquired a 5.61% interest in Bharti and on 22 December 2005 acquired a further 4.39% interest in Bharti. Total consideration for the combined 10.0% stake was Rs. 67 billion (£858 million).
• 5 January 2006 - Sweden: Sold Vodafone Sweden for €970 million (£660 million).
• 20 April 2006 - South Africa: Increased stake in Vodacom Group (Pty).
Limited ("Vodacom") by 15.0% to 50.0% for a consideration of ZAR15.8 billion (£1.5 billion).
• 27 April 2006 - Japan: Disposed of 97.7% stake in Vodafone Japan for ¥1.42 trillion (£6.9 billion) including the repayment of intercompany debt of ¥0.16 (£0.8 billion) to Softbank. The Group also received non-cash consideration with a fair value of approximately ¥0.23 trillion (£1.1 billion), comprised of preferred equity and a subordinated loan. Softbank also assumed debt of approximately ¥0.13 trillion (£0.6 billion).
• 24 May 2006 - Turkey: Telsim Mobil Telekomunikasyon ("Telsim") was acquired for $4.67 billion (£2.6 billion).
• 29 June 2006 - Greece: Since Vodafone Greece announced a public offer for all remaining shares not held by the Group on 1 December 2003, the Group increased its effective interest in Vodafone Greece to 99.8% at 31 March 2006. Between 1 and 29 June 2006, the Group acquired a further 0.1% interest in Vodafone Greece through private transactions at a price equal to the price paid in the public offer, leading to an interest of 99.9%.
• 3 November 2006 - Belgium: Disposed of 25% interest in Belgacom Mobile SA for €2.0 billion (£1.3 billion).
• 25 November 2006 - Netherlands: Group's shareholdings increased to 100.0% following a compulsory acquisition of outstanding shares.
• 3 December 2006 - Egypt: Acquired an additional 4.8% stake in Vodafone Egypt bringing the Group's interest to 54.9%.
• 20 December 2006 - Switzerland: Disposed of 25% interest in Swisscom Mobile AG for CHF4.25 billion (£1.8 billion).
• 8 May 2007 - India: Acquired companies with interests in Hutchison Essar for $10.9 billion (£5.5 billion), following which the Group controls Hutchison Essar (see note 35 to the Consolidated Financial Statements).
• 9 May 2007 - India: A Bharti group company irrevocably agreed to purchase the Group's 5.60% direct shareholding in Bharti Airtel (see note 35 to the Consolidated Financial Statements). (Vodafone Annual Report 2007)
INFORMATION TECHNOLOGY
VODAFONE Mobile network infrastructure
Network infrastructure is fundamental to the Group being able to provide mobile services. The mobile network enables the Group's customers to place and receive voice calls and allows the Group to provide other services, such as text messaging. When a voice call or data transmission is made on a mobile device, voice or data is sent from the device and transmitted by low powered radio signals to the nearest base station, which in turn is connected to the Group's network. Each base station provides coverage over a given geographic area, often referred to as a cell. Cells can be as small as an individual building or as large as 20 miles across. Each cell is equipped with its own radio transmitter and receiver antenna. This network of cells provides, within certain limitations, coverage over the service area. When a customer using a mobile device approaches the boundary of one cell, the mobile network senses that the signal is becoming weak and automatically hands over the call to the transmission unit in the next cell into which the device is moving. If the voice call or data transmission is intended for delivery to another device which is not on the Vodafone network, the information is delivered through a public or private fixed line telephone network or the Internet. In a 2G network, each cell contains a base station using a number of radio frequencies or channels. A group of base stations is connected to a base station controller, which in turn is connected to a mobile switching centre and then via a gateway support node for access to a fixed line network or the Internet. In a 3G network, voice or data traffic is passed through a Node B, being similar to a base station in a 2G network, to a radio network controller which is then connected to a mobile switching centre, similar to a 2G network. Base stations and Node Bs form a core element of a mobile network and an insufficient number of base stations can result in loss of service for customers. In addition, the correct deployment of the right base stations is instrumental in achieving the network quality and coverage that are crucial to customer satisfaction. (Vodafone Annual Report 2005)
2G Technology
Vodafone operates 2G networks in all its mobile operating subsidiaries, principally through Global System for Mobile Communications ("GSM") networks, offering customers services such as voice, text messaging ("SMS") and basic data services. In addition, the majority of the Group's controlled networks operate General Packet Radio Service ("GPRS"), often referred to as 2.5G. GPRS allows mobile devices to be used
for sending and receiving data over an Internet Protocol based network, enabling wireless access to data networks like the Internet. The 2G PDC network in Japan, although based on a different standard, provides similar features to the Group's GPRS networks.
The GPRS data service offering includes Internet and e-mail access allowing the customer to be always connected at download speeds slightly below a dial-up modem. Vodafone also offers a great variety of services on its Vodafone live! portal, such as picture and video messaging, download of ringtones, news and many other services. (Vodafone Annual Report 2005)
3G Technology
Vodafone's 3G networks, operating the wideband code division multiple access ("W-CDMA") standard, provide customers with mobile broadband data access, allowing data download speeds of up to 384 kilobits per second, which is up to seven times faster than a dial-up modem. Vodafone has expanded its service offering on 3G
networks with high speed Internet and e-mail access, video telephony, full track music downloads, mobile TV and other data services in addition to existing voice and data services.
The Group has secured 3G licences in all jurisdictions in which it operates through its subsidiary undertakings and in which such licences have been awarded to date. Vodafone expects to participate in additional 3G licence allocation procedures in other
jurisdictions in which it operates. No assurances can be given that the Group will be successful in obtaining any 3G licences for which it intends to apply or bid. Rollout of the 3G network infrastructure has continued throughout the 2005 financial year, with total tangible capital expenditure amounting to approximately £5.1 billion during the financial year, including approximately £1.6 billion incremental expenditure on 3G network infrastructure. The 3G network rollout is focused to deliver high quality indoor coverage to enable the delivery of the new 3G services. (Vodafone Annual Report 2005)
Wireless local area networks ("W-LAN")
The Group's subsidiary companies in Greece, Hungary, Malta, the Netherlands and the UK introduced public access W-LAN services during 2004, bringing the total to nine subsidiaries in addition to several affiliates and Partner Networks which provide this offering. The Group is integrating public access W-LAN services into its Vodafone Mobile Connect family of data devices, software and services in a comprehensive mobile data offering. Roaming services are being introduced among several of the Group companies giving customers access to thousands of W-LAN hotspots at home and abroad. (Vodafone Annual Report 2005)
Vodafone live! With 3G
In November 2004, the Group launched Vodafone live! with 3G across 13 markets with an initial portfolio of 10 devices. By 31 March 2005, there were 2.1 million devices on controlled networks capable of accessing the Vodafone live! with 3G portal. 3G has enhanced the mobile experience with up to a ten-fold increase in portal and content download speeds over GPRS, giving Vodafone live! customers access to a unique range of high quality content and communication services. Vodafone live! With 3G customers can now experience news broadcasts, sports highlights, music videos, movie trailers and a host of other video content at a quality approaching that of digital television. With the signing of an exclusive deal with Twentieth Century Fox, Vodafone customers were also the first to experience a new generation of made-for-mobile TV and film content, so called "mobisodes". Several markets have already launched TV broadcast services and these will be developed further in the coming year. The wide bandwidth of 3G supports access to sophisticated 3D games and Vodafone has introduced a range of branded titles.
The 3G service also supports full track music downloads which allow customers to use their phone to listen to music, choosing from a range that currently includes over 500,000 music tracks. Vodafone has secured music from some of the world's greatest artists through agreements with Sony BMG Music Entertainment and for music from the catalogues of EMI and Warner Music. Using the 3G service, customers can also download live performance videos and stream clips direct to their mobiles through Vodafone's agreement with MTV.
Clear and simple pricing, including free/flat rate browsing, service bundles and trial promotions have also been introduced in the majority of markets offering Vodafone live! with 3G. In addition, significant focus has been given to customer service with dedicated 3G experts available in retail stores and call centres. This year has also seen the launch in several markets of video call centres where customers can learn how to use the new video telephony service. (Vodafone Annual Report 2005)
Vodafone Mobile Connect data cards
The Vodafone Mobile Connect data card provides working mobility to customers accessing email and company applications with access speeds up to 384 kilobits per second when connected to a 3G network. The Vodafone Mobile Connect 3G/GPRS data card has now been rolled out across 17 markets, including the Group's associated undertakings in France, Belgium and South Africa and the Group's Partner Network operators in Austria, Bahrain and Finland. The product portfolio was enhanced in the financial year with the launch of a quad-band data card allowing customers to connect whilst travelling in the US and a data card supporting both GPRS and EDGE technology which provides high speed connectivity in a number of the Group's Partner Networks. Vodafone Mobile Connect data cards are available in an increasing number of distribution channels and with a growing range of service and price bundles. At 31 March 2005, there were 0.5 million registered Vodafone Mobile Connect data cards on the Group's controlled networks, including 0.3 million 3G/GPRS data cards. (Vodafone Annual Report 2005)
High Speed Downlink Packet Access ("HSDPA")
HSDPA is a wireless technology enabling data transmission speeds of up to 3.6 megabits per second in the first phase. It allows increased mobile data traffic, and improves the customer experience through the availability of enhanced mobile broadband services and significantly shorter download times.
In later phases, peak speeds up to 7.2Mbps will be available in hotspots first, with up to 14.4 Mbps achievable with later releases. This is expected to provide customers with faster access speeds than experienced on existing 3G networks. The performance figures quoted are theoretical peak rates deliverable by the technology in ideal radio conditions with no customer contention for resources.
HSDPA is enabled through the deployment of new software in the 3G radio network and expanding the processing capabilities of the node B. Significant performance benefits are achieved by using mechanisms that use the radio interface more effectively and are further adapted to 'bursty' packet based data traffic using IP. Vodafone Mobile Connect data cards which support HSDPA are available commercially and compatible Vodafone live! Handsets were launched in the summer of 2006.
HSDPA was launched commercially in many of the major mobile markets of the Group during the 2007 financial year. All markets are considering upgrades to serve higher bandwidths for customers as each market situation justifies.
While HSDPA focuses on downlink (network to mobile), Vodafone is also improving the data speeds in the uplink (mobile to network) to achieve speeds of up to 384kbps. HSUPA (High Speed Uplink Packet Access) is expected to further enhance the uplink speed beyond 1 megabit per second. (Vodafone Annual Report 2007)
RECOMMENDATIONS
As per the research done on Vodafone, we can suggest that online purchasing of connection should be allowed to the customer. In this way Vodafone can reduce the expenses done on opening various outlets throughout the world.
In order to purchase the connection the customer has to show his/her address proof as well as photo proof by properly scanning the data's and mailing it online to the company. The company should then confirm the Address and as well as the persons genuineness before delivering him/her the connection or before activating the connection in his/her name.
The Research and Development department should work out a method to make Purchasing of connection electronically. Today in the world of E-Business Vodafone should look into e-marketing of their product where in everything can be done online, right from the purchasing of the connection to the payment made for the validity of the connection so that the customer can have all the facilities without even going out from their apartments and just by accessing the internet. Vodafone should give every customer an online account so that can access their account from anywhere and get all the facilities.
BIBLIOGRAPHY
* Vodafone's history retrieved on 1st November, 2007 at 06:15 p.m. from: http://www.vodafone.com/start/about_vodafone/who_we_are.html
* Vodafone's Annual Report 2005 retrieved on 4th November, 2007 at 04:45 p.m. from: http://www.vodafone.com/etc/medialib/attachments/investor_relations/annual_reports/2005.Par.11025.File.pdf
* Vodafone's Annual Report 2007 retrieved on 4th November, 2007 at 07:30 p.m. from: http://www.vodafone.com/etc/medialib/attachments/agm_2007.Par.62252.File.tmp/Vodafone_RA_2007_web.pdf
* Porter's Five forces retrieved on 5th November, 2007 at 04:00 p.m. from: http://www.cybozone.com/vcu/Vodafone_Air_Touch_-_The_Acquisition_of_Mannesmann.pdf
* SWOT Analysis retrieved on 5th November, 2007 at 06:50 p.m. from: http://www.cybozone.com/vcu/Vodafone_Air_Touch_-_The_Acquisition_of_Mannesmann.pdf
SIDDHARTH GOYAL I.D. NO: 020106010
MODULE NO: U51024 BBA - COHORT - 2006