Vodafone
Vodafone is a multinational mobile phone operator with headquarters in Newbury, Berkshire, United Kingdom and Düsseldorf, Germany. It is the largest mobile telecommunications network company in the world by turnover, with equity interests in 27 countries and Partner Networks (networks in which it has no equity stake) in a further 14 countries.
At 30 June 2005 Vodafone had 165.0 million proportionate customers in 27 markets. ("Proportionate customers" means for example that if Vodafone has a 30% stake in a business with a million customers that is counted as 300,000). On this measure it is the second largest mobile telecoms group in the world behind China Mobile. The six markets where it had more than ten million proportionate customers were: Germany; United States; Italy; United Kingdom; Japan; Spain. In the U.S these customers came via its minority stake in Verizon Wireless, and in the other five markets Vodafone had majority controlled subsidiaries.
Vodafone is listed on the London Stock Exchange as Vodafone Group (LSE: VOD.L) and New York Stock Exchange, symbol VOD. Vodafone stands for VOice-DAta-FONE.
Management
- Chairman - Ian MacLaurin, Lord MacLaurin of Knebworth
- Deputy Chairman - Paul Hazen
- Chief Executive - Arun Sarin
- Chief Operating Officer - Sir Julian Horn-Smith
- Chief Marketing Officer - Peter Bamford
- Chief Technology Officer - Thomas Geitner
Controversies
Competition Scams
In October 2005 Which? magazine published an article describing the company's dubious and suspicious running of a Who Wants To Be A Millionaire competition in 2003 and 2004. The game cost money to play and £4,500 was available in prizes every month. However, Otelo, the telecommunications Ombudsman, as well as Which? magazine itself, were unable either to locate the winners or to ascertain what happened to the prize money. Vodafone refused to cooperate with either enquiry and thus has left itself open to accusations of fraud and dishonesty as well as claims for financial compensation.
False Advertising (1)
Early in 2005 Ofcom upheld a multiple complaint from Leicestershire County Council in which seven sets of terms and conditions were adjudged to be unfair. One of them pertained to the advertising literature for a Vodafone insurance service. The textbox detailing the areas covered under the policy were not included in the small print when signing the actual contract. This was therefore considered as misleading according to the Control of Misleading Advertisements Regulations (1988).
False Advertising (2)
In September 2005 the British Advertising Standards Authority rebuked the company for its poster advertisements in which it claimed to be the "best in Britain bar none". The Authority viewed the claim as being too general whereas the only true substance of the claim was the company's superior reception coverage. It was also considered poor practice to display small print on a pale background as the company had done in this advertisement.
Unfair Terms and Conditions
Early in 2005 Ofcom upheld a multiple complaint from Leicestershire County Council in which seven sets of terms and conditions were adjudged to be unfair. These terms and conditions, originally published in 2004, were considered unfair according to the Control of Misleading Advertisements Regulations (1988). The areas in which the terms and conditions were unfair were:
- Top up transfer
- General website terms
- Vodafone mail
- Airtime
- Pay monthly
- Vodafone live! Postcard
- M-pay bills
In March 2005 Ofcom closed the case having compelled Vodafone to amend the wording of their terms and conditions.
Vodafone in Europe
Vodafone currently operates in the following countries in the European region:
- Albania - Vodafone Albania Website
- Austria - A1 Website
- Belgium - Proximus Website
- Croatia - VIP (mobile operator) Website
- Cyprus - Cytamobile-Vodafone Website
- Czech Republic - Oskar Vodafone (mobile operator) Website
- Denmark - TDC Mobil Website
- Estonia - Elisa (mobile operator) Website
- Faroe Islands - Kall [1]
- Finland - Elisa (mobile operator) Website
- France - SFR Website
- Germany - Vodafone Germany Website
- Greece - Vodafone Greece Website
- Hungary - Vodafone Hungary Website
- Iceland - Og Vodafone Website
- Ireland - Vodafone Ireland Website
- Italy - Vodafone Italy Website
- Lithuania - Bité (mobile operator) Website
- Luxembourg - LUXGSM Website
- Malta - Vodafone Malta Website
- Netherlands - Vodafone Netherlands Website
- Poland - Plus GSM Website
- Portugal - Vodafone Portugal Website
- Romania - Connex Website
- Slovenia - Si.mobil-Vodafone Website
- Spain - Vodafone Spain Website
- Sweden - Vodafone Sweden Website
- Switzerland - Swisscom Website
- United Kingdom - Vodafone United Kingdom Website
History
- 1985-01-01: First phone call on Vodafone United Kingdom's Analogue network. This event was staged, due to a network failure; the first calls actually being made the next day. The first call was made to Vodafone head office - which was at that point above a curry house in Newbury, where the company remains today (but now in a custom-built HQ building).
- October 1991: Racal Telecom is demerged from Racal Electronics and becomes Vodafone Group.
- June 1992: Vodafone Germany's (still as "Mannesmann Mobilfunk GmbH") network went live.
- July 1992: Vodafone United Kingdom's GSM network went live.
- September 1992: Vodafone Sweden's network went live.
- October 1992: Vodafone Portugal's (still as "Telecel, Comunicações Pessoais, SA") network went live.
- July 1993: Vodafone Greece's network went live.
- July 1993: Vodafone Ireland's GSM network went live, as Eircell; a ETACS network had operated from ~1985.
- September 1995: Vodafone Italy's (still as "Omnitel") network went live.
- November 1995: Vodafone Spain's (still as "Airtel") network went live.
- February - April 2000: Vodafone enters German market by buying mobile network operator Mannesmann Mobilfunk GmbH & Co KG. The deal is one of the largest in European history.
- 2001-04-16 First 3G voice call on Vodafone United Kingdom's 3G network.
- 2001: Vodafone took over Eircell, then part of Eircom in Ireland and rebranded it Vodafone Ireland.
- 2001-2002: Vodafone acquired Japan's third largest mobile operator J-Phone, which had introduced camera phones first in Japan.
- 2002: Vodafone rebranded Japan's J-sky mobile internet service as Vodafone live!™ as its mobile customer portal
- 2004: Vodafone introduced 3G services into Europe.
- 2005: Vodafone increased its participation in Romania's Connex to 99%. Vodafone also bought Czech mobile operator Oskar.
Vodafone in Asia-Pacific
Vodafone currently operates in the following countries in the Asia-Paficic region:
- Australia - Vodafone Australia Website
- Fiji - Vodafone Fiji Website
- Japan - Vodafone Japan Website, formerly known as J-Phone
- Hong Kong - Smartone-Vodafone (not owned by Vodafone, only under partner network agreement) Website, formerly known as Smartone
- New Zealand - Vodafone New Zealand Website
- Singapore - M1 (mobile operator) Website
History
- July 1993: BellSouth New Zealand's network went live.
- October 1993: Vodafone Australia's network went live.
- July 1994: Vodafone Fiji's network went live.
- November 1998: Vodafone purchased BellSouth New Zealand, and it became known as Vodafone New Zealand.
- 1999-2000: J-Phone launched the J-sky mobile internet service in response to DoCoMo's i-Mode service.
- December 2002: J-Phone's 3G network went live.
- October 1st 2003: Vodafone changed the name of its Japanese subsidiary from J-Phone to 'Vodafone', and the name of J-Phone's mobile internet service from J-Sky to Vodafone Live!
- April 2005: Smartone changed the name of its brand from Smartone to 'Smartone-Vodafone'
- August 2005: Vodafone released 3G technology in New Zealand
- October 2005: Vodafone begins releasing 3G technology in Australia
Vodafone in the Middle East and Africa
Vodafone currently operates in the following countries in the Middle East and Africa region:
- Bahrain - MTC-Vodafone Website
- Democratic Republic of the Congo - Vodacom Website
- Egypt - Vodafone Egypt formerly known as ClickGSM Website
- Kenya - Safaricom Website
- Kuwait - MTC-Vodafone Website
- South Africa - Vodacom Website
History
- May 1998: Vodafone Egypt network went live under the name ClickGSM.
Vodafone in the United States
In the United States, Vodafone owns 44.4%1 of Verizon Wireless, the country's second largest mobile carrier. However, the phone company (Verizon) owns a majority of Verizon Wireless and Vodafone's branding is not used, nor is the network compatible with GSM phones. This relationship has been quite profitable for Vodafone, but there have historically been three problems with it. The first is the abovementioned incompatibility with the GSM standard used by Vodafone's other networks, and the consequent difficulty of offering roaming between Vodafone's US and other networks. The other two stem from the fact that Vodafone has does not have management control over Verizon Wireless. Vodafone is thus unable to use the Vodafone brand for its US operations, and (perhaps more importantly) has no control of dividend policy at Verizon Wireless and is thus entirely at the mercy of Verizon management with respect of cash flow from Verizon Wireless to Vodafone.
Perhaps as a consequence of these reasons, Vodafone made a bid for the entirety of AT&T Wireless when that company was for sale in 2004. Had this bid been successful, Vodafone would presumably have sold its stake in Verizon wireless, and then rebranded the resultant business as Vodafone. As AT&T Wireless used the GSM standard, this would have resolved all the above problems. However, Cingular Wireless ultimately outbid Vodafone and took control of AT&T Wireless and Vodafone's relationship with Verizon has continued.
1 Vodafone Group Plc. Key Performance Indicator press release for the quarter to 30 June 2005, 25 July 2005.
Financial results
From its 31 March 2006 year end onwards Vodafone will report its results in accordance with International Financial Reporting Standards (IFRS). It has issued results amended to IFRS standards for its 31 March 2004 and 31 March 2005 year ends for information purposes, and these are shown in the first table below.
Vodafone has some large minority stakes, in particular in Verizon Wireless in the United States and SFR in France, which are not included in its consolidated turnover. In order to provide additional information on the overall scale and growth trends of its business it publishes "proportionate turnover" figures and these are included in the tables below. For example, if a business in which it owns a 45% stake has turnover of £10 billion, that equals £4.5 billion of proportionate turnover for Vodafone. Proportionate turnover is not an official accounting measure and Vodafone's proportionate turnover should be compared with other companies' statutory turnover.
Vodafone also produces proportionate customer number figures on a similar basis, eg. if an operator in which it has a 30% stake has 10 million customers that equals 3 million proportionate Vodafone customers. This is a common practice in the mobile telecommunciations industry.
Year ended 31 March | Turnover £m | Profit before tax £m | Profit for the year £m | Basic eps (pence) | Proportionate customers (m) | Proportionate turnover £m |
---|---|---|---|---|---|---|
2005 | 34,073 | 7,951 | 6,518 | 9.68 | 154.8 | 43,602 |
2004 | 32,492 | 9,013 | 6,112 | 8.70 | 133.4 | 39,446 |
The following table shows Vodafone's results under UK generally accepted accounting principles (UK GAAP). By the end of its key acquistion drive, which ran from 1999 to 2002, Vodafone had more than £100 billion of goodwill on its balance sheet. As UK GAAP requires goodwill to be written off against the profit and loss account Vodafone has shown large statutory losses since then. However this write off of goodwill is purely an accounting adjustment and does not affect Vodafone's cash position or its ability to pay dividends. Despite the reported losses it is in reality a highly profitable company, and this is reflected in the fact that it is consistently one of the top twenty companies in the world by market capitalisation. Vodafone's accounts for the years shown in the table below include a great number of one off transactions, and apart from noting the rapid expansion of the group, no conclusions about underlying trends should be drawn from the figures without examining the accounts in more detail.
Year ended 31 March | Turnover £m | Profit/(loss) before tax £m | Profit/(loss) for the year £m | Basic eps (pence) | Amortisation of goodwill £m | Proportionate customers (m) | Proportionate turnover £m |
---|---|---|---|---|---|---|---|
2005 | 34,133 | (4,702) | (7,540) | (11.39) | 14,700 | 154.8 | 43,602 |
2004 | 33,559 | (5,047) | (9,015) | (13.24) | 15,207 | 133.4 | 39,446 |
2003 | 30,375 | (6,208) | (9,819) | (14.41) | 14,056 | 119.7 | 33,926 |
2002 | 22,845 | (13,539) | (16,155) | (23.77) | 13,470 | 101.1 | 29,799 |
2001 | 15,004 | (8,095) | (9,763) | (16.09) | 9,585 | 83.0 | 22,230 |
2000 | 7,873 | 1,349 | 487 | 1.80 | 1,712 | 39.1 | 12,569 |
1999 | 3,360 | 935 | 637 | 4.12 | 8 | 25.4 | 9,185 |
Corporate sponsorship
- Manchester United football club
- England cricket team
- Scuderia Ferrari Formula One constructor
- DTM (the German touring car series)
- Vodafone Oaks and Vodafone Derby horse races at Epsom.
- Newbury AFC (The football club from Newbury, where Vodafone was founded.)
- Daily Express Life Savers Awards
- David Beckham
- Clare GAA, Ireland (formerly sponsored by Eircell)
References
- ECB dials up £12m deal. BBC Sport (11. December, 2000).
- Ferrari extend sponsorship deal. BBC Sport (16. December, 2004).
- Man Utd rings up £36m shirt deal. BBC News (1. December, 2003).