March 23, 2006
 

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Posted: 09.04

Global Mobile

Does Vodafone have what it takes to rule the mobile world?
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By Maryann Dickerson and Teresa von Fuchs




According to a special Gartner report, one of the world’s largest mobile telecommunications companies, U.K.-based Vodafone, is positioned to affect the future of global mobile phone usage.

Founded in 1982 as a spin-off from Racal Electronics, Vodafone has significant market share in Western Europe, Asia and, through a partnership with Verizon Wireless, the United States. Vodafone has stated it will continue to use acquisition opportunities to reach its goal of becoming “the world’s mobile communications leader.”

Critics argue that Vodafone’s purchasing strategy has several holes: One, its use of value-inflated stock to acquire regional carriers around the globe and, two, the hefty price it paid for 3G licenses in Europe.

However, even after the bust hit the technology sector, “Vodafone has emerged in good financial shape, comparatively speaking, with a patchwork of mobile properties that form the beginnings of a credible global mobile presence,” reports Gartner. One special report chalks up the success to Vodafone’s ability to respond to a quickly changing market and seize opportunities as they arise.

Gartner also lists Vodafone’s ability to “exploit operational synergies” across Europe, effectively providing single-
carrier coverage for travelers, and its functional developments for supply chain, IT and technology management as reasons for the company’s strong position.

Senior analyst with Gartner, Michael King, explains that Vodafone has also reached beyond just branding its services to more of a branded experience. He says, “Vodafone’s leveraging of the brand is interesting in that it’s actually made alterations to handsets and on services like Vodafone live!, the user interface and browser pages. That gives people a comfort level in terms of using the [branded] services.”

Vodafone CEO Arun Sarin announced late last year that the company’s goals are to provide outstanding service to customers, leverage and exploit synergies to increase global market share and expand services internationally.

However, Vodafone’s share in the U.S. market, through its partnership with Verizon Wireless, has not been sufficient for a company that has put so much into branding. “Vodafone’s stated strategy has been ownership of a leading carrier in a given country, and here [in the U.S.] they only have a 49 percent ownership stake,” explains King. “And though it’s been a very lucrative partnership—with profitable success in both voice and data services—it hasn’t enabled Vodafone to leverage its global brand.” And branding, according to King, is more important to Vodafone’s global strategy than profitability.
—MaryAnn Dickerson and
Teresa von Fuchs
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