Professional Documents
Culture Documents
TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
SWOT Analysis.....................................................................................................4
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COMPANY OVERVIEW
Vodafone Group Plc (Vodafone or the group) is a telecommunications company providing a range
of services, including voice, messaging, data and fixed broadband. The group operates in Europe,
and Africa, Middle East, and Asia Pacific (AMAP). It is headquartered in Berkshire, the UK and
employed 97,721 people during the financial year ended March 2014 (FY2014).
The group recorded revenues of 38,346 million ($60,943.3 million) during FY2014, an increase of
0.8% over FY2013. The operating loss of the group was 3,913 million ($6,218.9 million) in FY2014,
compared to an operating loss of 2,202 million ($3,499.6 million) in FY2013. Its net profit was
59,254 million ($94,172.4 million) in FY2014, compared to a net profit of 413 million ($656.4
million) in FY2013.
KEY FACTS
Head Office
Phone
44 1635 33251
Fax
Web Address
http://www.vodafone.com/
March
Employees
97,721
London Stock
Exchange Ticker
VOD
NASDAQ Ticker
VOD
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SWOT ANALYSIS
Vodafone Group plc (Vodafone or the group) is a telecommunications company providing a range
of services, including voice, messaging, data and fixed broadband. The group's broad geographical
footprint is a strong competitive advantage. However, mature European mobile markets may impact
Vodafone's mobile revenue growth and profitability in coming years.
Strengths
Weaknesses
Opportunities
Threats
Strengths
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the group's revenue from other European countries; Vodacom; and other countries in Africa, Middle
East and Asia Pacific accounted for 12.8%, 11%, and 13.6%, respectively, of the total revenues.
Vodafone is also exposed to emerging markets which provide high growth opportunities.
The exposure to these high growth markets enhances the growth prospects at Vodafone. Further,
the global scale also ensures the group will have a better bargaining power with equipment
manufacturers. Another key advantage that global companies have is that they will be able to replicate
the successful products and services across a larger market. All these factors equip Vodafone with
many competitive advantages. The geographically diverse portfolio is of particular importance in the
recent times when the macro economic conditions in Europe have been adverse. The company is
positioned as a global provider of telecommunication services and has historically able to win global
contracts, which further highlights the company's competitive advantage, especially in an industry
where some of the largest telecom companies cater to single geography.
Strong market position
Vodafone enjoys strong market position as evident from the high market shares it enjoys and from
the strong brand it owns. The group has leading market position and is either the largest or the
second largest mobile operator, when measured by revenue market share, in countries that it operates
in. Vodafone outperformed competitors by increasing market share in most of its key markets over
the last year. Vodafone is the largest mobile operator in the German market with a revenue market
share of 34%. The group is also the largest mobile operator in Italy with 33% revenue share. Its 65%
owned subsidiary Vodacom is the market leader in South Africa with a market share of 52%. In the
core market the UK, Vodafone accounts for 25% of the UK market (measured by revenue) and has
a market leading share of the mobile enterprise market. It also holds 28% market share in Spain. In
India, the group's largest market by subscribers, it had a revenue market share of 22%.
Furthermore, the group enhanced its fourth generation (4G) network coverage. According to industry
estimates, Vodafone is one of the dominant 4G players in Europe. In FY2014, Vodafone had a 53%
share in the German 4G market. In addition, the group had substantial positions in the 4G markets
of Spain, Romania, Ireland, Italy and Greece, where it has market shares of 86%, 51%, 42%, 41%
and 43%, respectively. Also, Vodafone has a strong 4G network in Australia covering 95% of the
region. Moreover, the group has a strong brand value. As of FY2014, Vodafone's brand is ranked
fourth among telecom brands globally with an attributed worth of $30 billion and was listed as the
most valuable telecoms brand in the world. The strength of the brand raises the profile of the group's
distribution channels and is a major driver of purchasing decisions for consumers and enterprise
customers alike.
Coupled with the global operations, its leading market position enables Vodafone to reap cost
efficiencies. The networks support about 434 million mobile subscribers and carry nearly one trillion
minutes of calls each year. This scale enables the group to secure considerable unit cost savings
in various ways, including purchasing, standardization of processes, off-shoring activities to lower
cost locations, outsourcing non-core activities to third parties and sharing common resources with
other operators. In addition, the market position and brand enables faster penetration into new
product and geographical markets.
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Weaknesses
Opportunities
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expand its M2M capability beyond connectivity. Cobras telematics products and expertise is expected
to enable Vodafone to provide a more comprehensive range of end-to-end services to automotive
customers. In July 2014, the group acquired 100% stake in Grupo Corporativo Ono, a Spanish
broadband communication and entertainment company, for approximately E7.2 billion ($9.6 billion).
The transaction is expected to accelerate Vodafones unified communications strategy in a key,
highly converged European market, providing a significant time-to-market advantage and network
reach that is complementary to Vodafone Spains ongoing fibre-to-the-home (FTTH) build program
with Orange. The combination of Vodafone and Ono is expected to create a leading integrated
communications provider in Spain and represents an attractive value creation opportunity for
Vodafone. In April 2014, the group also acquired the remaining 11% stake in Vodafone India.
Earlier, in October 2013, the group acquired a 76.6% stake in Kabel Deutschland, a provider of
television and telecommunications services based in Germany. The acquisition of Kabel Deutschland
is expected to provide robust growth opportunities in the German market, where Vodafone has been
witnessing stringent competition in the mobile segment. The combination of the group and Kabel
Deutschland is expected to create a leading integrated communication operator in Vodafone's largest
European market. Kabel Deutschland is expected to provide Vodafone with an attractive platform
for television and fixed broadband in Germany, which can be leveraged to offer premium unified
communications services to customers and businesses. Moreover, the acquisition is expected to
enable Vodafone to provide triple-play and quad-play bundled products, which combine television,
broadband, fixed calls and mobile services as a single package.
These strategic acquisitions would enhance Vodafones presence in the European markets and
expand its product offerings.
Increasing demand for 4G LTE services
The strong growth in the smartphones market and the increasing demand for high speed data has
led to the growth in 4G LTE market. According to industry estimates, the global 4G LTE market is
expected to reach $610.7 billion in 2019 growing at a CAGR of 78.6% during 2013-19. Further, the
number of subscribers is expected to be more than two billion in 2019 growing at a CAGR of over
36.6% during 2014-19. Likewise, the 4G mobile wireless penetration in Western Europe, is expected
to reach 50% by 2020 from a mere 8% in 2014. According to the company, 11% of the smartphones
and 17% of the total data traffic used in Europe employed 4G network.
Vodafone is poised to benefit from strong growth in the 4G LTE market. According to industry
estimates, Vodafone is one of the dominant 4G players in Europe. In FY2014, Vodafone had a 53%
share in the German 4G market. In addition, the group had substantial positions in the 4G markets
of Spain, Romania, Ireland, Italy and Greece, where it has market shares of 86%, 51%, 42%, 41%
and 43%, respectively. Also, Vodafone has a strong 4G network in Australia covering 95% of the
region. Also the group had 4.7 million customers across 14 markets for its 4G services and its 4G
plans generated 18% more average revenue per user (ARPUs) compared to 3G in FY2014.
As part of its strategy to strengthen its network and service offerings, Vodafone announced its Project
Spring. Through this, the company expects to enhance its 4G deployments and reach 91% outdoor
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population coverage in Europe by 2016. Further, the group possesses strong portfolio of spectrum
assets that would help it to build an efficient 4G network. Additionally, Vodafone also increased its
focus on voice based services through voice over long term evolution (VoLTE) and multimedia
broadcast multicast service (eMBMS) that enables the broadcast of video and content over 4G.
Furthermore, Vodafone has been driving various new evolutions that include convergence of time
division duplexing (TDD) with frequency division duplexing (FDD) technology, to enhance the
performance of 4G in the future.
The strong market share in 4G LTE market and increased investments would enhance the groups
4G LTE service offerings and provide it with an opportunity to increase its market share in the future.
Mobile money represents significant growth opportunity
Mobile money has been causing a significant transformation in how banked and previously unbanked
people globally are conducting their financial activities. These services play a central role in extending
the reach of formal financial services to the unbanked and financially underserved populations in
several economies. Also, the use of mobile handsets to make payments has grown in the recent
years. Paying by smartphone or tablet is the most dynamic trend in the payment arena. The trend
is expected to continue in the coming years, as adoption of mobile technologies is expected to
increase in coming years. According to industry estimates, mobile money market, which includes
mobile payments, mobile remittance, mobile banking, and mobile commerce services, is expected
to increase from $13.8 billion in 2013 to $278.9 billion in 2018, representing a CAGR of more than
80% during that period.
Vodafone has been focused on offering money transfer services to its customers in emerging and
other markets across the world. In emerging market, the group offers M-Pesa, a mobile money
transfer service. At the end of FY2014, Vodafone had 17 million active M-Pesa customers, over
200,000 active agents and processed 2.8 billion transactions. Vodafone M-Pesa customers transfer
around E900 million ($1,430.4 million) per month. The service is currently available in Kenya,
Tanzania, South Africa, Afghanistan, Qatar, Fiji, the Democratic Republic of Congo and India. In
FY2014, the group expanded its M-Pesa service in India, Egypt, Lesotho and Mozambique. In March
2014, the company launched its M-Pesa services in Romania. Additionally, the company introduced
Lipa Na M-Pesa, a retail payment proposition for consumers, and expanded its international money
transfer propositions. In addition, the group offers M-Shwari, a paperless banking product for M-Pesa
customers in Kenya, in partnership with Commercial Bank of Africa. M-Shwari enables customers
to save and borrow directly via their phone, while earning interest on the money saved.
The group's growing presence and the robust outlook for the end market will provide it with significant
growth opportunity in the future.
Positive outlook for M2M market
The global machine-to-machine (M2M) connectivity services market is growing rapidly. M2M refers
to technologies that allow both wireless and wired systems to communicate with other devices of
the same ability. The M2M market has become a mainstream segment of the cellular industry.
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According to industry estimates, global M2M connections grew at a CAGR of 38% during 2010-13
to reach 195 million in 2013. Asia was the largest regional M2M market accounting for 42% of global
M2M connections, followed by Europe (28%), North America (18%), Latin America (8%), Africa (4%)
and Oceania (1%) in 2013. M2M connections are expected to reach 250 million by the end of 2014,
an increase of about 28%.
Vodafone is an established player in the global M2M market. The group supports M2M solutions
ranging from location monitoring of vehicles and remote patient monitoring through to supporting
real-time secure payments and providing real-time inventory reports for retailers. The other M2M
solutions offered by the company include integrated M2M terminals; energy data management;
smart grid and metering; telematics usage based insurance; asset tracking; monitoring and control;
and connected cabinets. The group also plans to extend its M2M reach through the Project Spring
investments. The group intends to invest on the development of enterprise products and services;
extend its M2M reach to 75 countries and roll-out hosting and internet protocol based virtual private
network (IP-VPN) services internationally.
The group's increasing focus on M2M market and the robust outlook will further increase the demand
for Vodafone's solutions and enhance its market share in the coming years.
Increased adoption of cloud computing services
The worldwide demand for cloud computing services is expected to record strong growth in coming
years. Cloud computing is a computing infrastructure model, which enables delivery of
software-as-a-service (SaaS). This reduces the upfront royalty or licensing payments, investment
in hardware and other operating expenses. Several organizations around the world have been
realizing the potential benefits of cloud and are adopting these disruptive technologies to gain
business advantage. According to industry estimates, majority of new IT spending by 2016 is expected
to be on cloud computing platforms and applications. Worldwide spending on public IT cloud services
is forecasted to reach $107 billion by 2017, representing a compound annual growth rate (CAGR)
of 23.5% during 2013-17. Industry estimates also suggest that global SaaS market would reach
$133 billion by 2020. This market is expected to be major contributor to the growth in the cloud
computing market. Furthermore, the global cloud services market is expected to grow at a CAGR
of 17.6% during 2014-20 and reach $555 billion in 2020. In 2014, the overall cloud services market
revenue is expected to reach $209.9 billion.
The group has a strong focus on offering cloud solutions. Vodafone has been strengthening its
position in enterprise segment by enhancing product offering to large and medium-sized businesses
and creating a dedicated enterprise operational structure. One of the offerings that the group is
focused is cloud-based SaaS. In addition, Vodafone offers virtualized and multi-tenant cloud platforms.
Its products and solutions include co-location services, data storage solutions, and private cloud
solutions. The group's acquisition of Cable & Wireless Worldwide further strengthened its cloud
capabilities. Vodafone's increased focus and the growing end market will provide it with significant
growth opportunity.
Threats
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In addition, newer competitors, including handset manufacturers, internet based companies and
software providers, are also entering the market offering converged communication services.
Increased competition has also led to declines in the prices Vodafone charges for its mobile services
and is expected to lead to further price declines in the future. Competition may also require the group
to increase subsidy for handsets.
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